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Vodafone Group Plc
Annual Report 2022
Contents
Strategic report
01
S
Our strategic framework
02
S
About Vodafone
04
S
Financial and non-financial performance
06
Chairman’s message
07
Chief Executive’s statement
08
S
Market and strategy
10
S
Business model
12
Mega trends
14
Stakeholder engagement
16
Strategic review
21
Our people strategy
24
Our financial performance
34
S
Purpose, sustainability and
responsible business
36
Our purpose
36
–
Inclusion for All
41
–
Planet
44
–
Digital Society
46
Contribution to Sustainable Development Goals
47
Responsible business
47
–
Protecting data
52
–
Protecting people
56
–
Business integrity
58
Non-financial information
59
Risk management
65
–
Long Term Viability Statement
66
–
TCFD disclosure
Governance
68
S
Governance at a glance
70
Chairman’s governance statement
72
Our Company purpose, values, and culture
73
Our Board
75
Our governance structure
76
Division of responsibilities
77
Board activities and principal decisions
79
Board effectiveness
80
Nominations and Governance Committee
83
Audit and Risk Committee
89
ESG Committee
91
Remuneration Committee
93
Remuneration Policy
99
Annual Report on Remuneration
113
US listing requirements
114
Directors’ report
Financials
116
Reporting on our financial performance
117
Directors’ statement of responsibility
119
Auditor’s report
129
Consolidated financial statements and notes
215
Company financial statements and notes
Other information
223
Non-GAAP measures
234
Shareholder information
240
History and development
240
Regulation
249
Form 20-F cross reference guide
252
Forward-looking statements
253
Definition of terms
Welcome to our
2022 Annual Report
We have adopted a digital first approach to our reporting reflecting how we operate as a business.
Whilst the Annual Report continues to be a core part of our reporting suite, we use
{
a
{
simplified
format and include links to interactive online content, such as videos. This
{
online
{
material brings
to
{
life what we do and how we do it, and provides you with a better overall
{
understanding of
our
{
business. We also provide summaries at the start of each key section
{
denoted by an
S
in
{
the
{
contents to the left

.
We continue to publish a separate report that summarises our progress towards meeting the
recommendations of the Task Force on Climate-related Financial Disclosures
n
TCFD’

, as well as
{
a
comprehensive addendum that includes data on Environmental, Social and Governance
n
ESG’

topics.
ESG reporting
We have also reported against a number of voluntary reporting frameworks to help our
stakeholders understand our sustainable business performance. Disclosures prepared in
accordance with the Global Reporting Initiative
n
GRI’

or Sustainability Accounting Standards
Board
{n
SASB’

guidance can be found in our ESG Addendum or on investors.vodafone.com.
vodafone.com investors.vodafone.com
investors.vodafone.com/tcfd investors.vodafone.com/
esgaddendum
investors.vodafone.com/sasb investors.vodafone.com/ESG
References
The Annual Report has been designed to aid navigation. We have cross-referenced relevant
material and included navigation buttons that are
n
clickable’ when using the digital version
of
{
the
{
Annual
{
Report. Online content can be accessed by clicking links on the digital version of
this
{
Annual
{
Report,
copying the website address into an internet browser, or scanning the
4
R code
on
{
a
{
mobile device.
Read more
page reference
Click to see related
content online
Scan or click to watch
related video content online
This document is the Group’s U
.
Annual Report
{
and is not the Group’s Annual Report on
{
Form 20-F that will be filed separately
with the US SEC at a later date.
This report contains references to Vodafone’s website, and
{
other
{
supporting disclosures located thereon such as videos,
our
{
ESG
{
Addendum and our TCFD report, amongst others. These references are for readers’ convenience only
{
and
information
{
included on
{
Vodafone’s website is not incorporated in, and
{
does not form part of, this Annual Report.
FY22 results
summary:
Nick Read,
Chief
b
E
[
ecutive
FY22 results
detail:
Nick Read,
Chief
b
E
[
ecutive
FY22 financial
results:
Margherita
'
ella
b9
alle, Chief
Financial Officer
9
odafone
%
usiness
Digital Services

E
[
periences
9
odafone
Technology
Digital inclusion
Jean-François
van
%
o
[
meer,
Chairman
Net zero
9
alerie Gooding,
Senior Independent
Director, Workforce
Engagement Lead
and Chair of the
Remuneration
Committee
Data privacy
Cyber security
Human rights
Watch our video content
Our performance
Our digital investor briefings
Purpose pillars
Responsible business
Responsible
ta
[
ation
David Nish,
Chair of the
b$
udit
and
b
Risk Committee
$
mparo Moraleda,
Chair of the
ESG
b
Committee
Our governance
Strategic report
Governance
Financials
Other information
1
Vodafone Group Plc
Annual Report 2022
Reducing our
environmental
impacts and
{
helping
society decarbonise
Planet
Connecting
people
{
and things
and
{
digitalising
critical
{
sectors
Digital Society
Ensuring everyone has
access to the benefits
of a digital society
Inclusion for All
Our vision:
A new generation connectivity and
digital services provider for Europe & Africa
Leading innovation
in digital services
Our strategy:
Customer commitments
Best connectivity
products and services
Outstanding digital
experiences
Our strategy:
Enabling strategies
Simplified and most
efficient
{
operator
Leading gigabit
networks
Social contract
shaping the
digital
{
society
Our advantage:
Leading connectivity provider
Read more on
pages 16 to 20
Two attractive regions
with scale
Europe
& Africa
Read more on
pages 59 to 115
Strong frameworks
in place
Governance and
risk management
Read more on
pages 21 to 23
The
n
Spirit of
Vodafone’
Our people
and culture
Our strategic framework
Our strategy is focused on sustainable growth
to drive returns
FY22 Adjusted FCF
ahead of guidance
€5.4bn
Full year dividend
per share
9.0
eurocents
Read more on
pages 41 to 44
Read more on
pages 44 to 45
Read more on
pages 36 to 40
FY22 highlights
Our financial performance demonstrates our sustainable growth,
despite broader macroeconomic challenges. Our results are in line
with
{
our expectations for the year and our medium-term ambitions.
Organic service revenue growth
–
Good growth throughout FY22 in both Europe and Africa
–
Improving YoY trend in 10 out of 11 European markets
Our purpose:
We connect for a better future
Read more
on pages 24 to 33
ROCE inflection
–
Significant ROCE step-up on pre-pandemic level
–
EBITDAaL growth driving sustainable ROCE improvement
Adjusted EBITDAaL growth
–
Our highest EBITDAaL margin of last decade
–
Good improvement on pre-pandemic levels
3.3%
3.3%
0.8%
0.8%
2.4%
2.4%
2.7%
2.7%
2.0%
2.0%
FY22 +2.6%
FY22 +2.6%
Q4 FY22
Q3 FY22
Q2 FY22
Q1 FY22
Q4 FY21
€13.9bn
€13.9bn
€14.9bn
€14.9bn
€14.4bn
€14.4bn
€15.2bn
€15.2bn
+5.0%
1
+5.0%
1
31.9%
31.9%
33.1%
33.1%
32.8%
32.8%
33.4%
33.4%
FY22
FY21
FY20
FY19
5.1%
5.1%
5.5%
5.5%
6.3%
6.3%
7.2%
7.2%
+170bps
+170bps
H2 FY22
H1 FY22
H2 FY21
H1 FY21
Pre-tax ROCE (LTM)
Note:
1.
Organic growth. See page 223 for more information.
Governance
Financials
Other information
2
Vodafone Group Plc
Annual Report 2022
Strategic report
About Vodafone
How we are structured
A new generation connectivity
and digital services provider
Where we operate and what we sell
Europe
Consumer
52%
Vodafone
Business
27%
African
Consumer
16%
Europe Consumer
We provide a range of market leading mobile and fixed-line connectivity
services in all of our European markets, enabling customers to reliably call,
text and access data on their mobile devices, or access broadband, TV and
voice services at home.
Our converged plans combine these offerings, providing simplicity and
better value for our customers. Other value added services include our
Consumer IoT propositions, as well as security and insurance products.
Vodafone Business
We serve private and public sector customers of all sizes with a broad
range of connectivity services, supported by our dedicated global network.
We have unique scale and capabilities, and are expanding our portfolio of
products and services into growth areas such as unified communications,
cloud & security, and IoT.
African Consumer
We provide a range of mobile services, enabling customers to call, text
and access data. The demand for mobile data is growing rapidly driven by
the lack of fixed broadband access and by increased smartphone penetration.
Together with Vodacom’s VodaPay super-app and the M-Pesa payment
platform, we are the leading provider of financial services, as well as
business and merchant services in Africa.
Our products and services
Core connectivity products and services in fixed and mobile account
for
{
the ma
M
ority of our revenue. However, we are constantly expanding
our
{
portfolio into high return growth areas, such as digital services,
the
{
Internet of Things (
n
IoT’) and financial services, that leverage and
complement our core connectivity business.
Service revenue
Core connectivity
87%
Growth platforms
13%
Digital
services
10%
IoT
2%
Financial
services
1%
Core connectivity
87%
Growth platforms
13%
Digital
services
10%
IoT
2%
Financial
services
1%
Service revenue
€38.2bn
Retail & service
Europe
Consumer
€20bn
service revenue
Vodafone
Business
€10bn
service revenue
Africa
Consumer
€6bn
service revenue
Growth platforms
Digital services
>50m
Customers subscribed
to a digital service
Internet of Things
150m
IoT SIM connections
(FY21: 123 million)
Financial services
52.4m
M-Pesa customers
4
(FY21: 48.3 million)
Shared operations
Supplier
management
>€600m
savings p.a.
Network & digital
operations
>€400m
savings p.a.
Inter-network
operations
>€250m
revenue and
savings p.a.
Infrastructure assets
Passive mobile
€16.2bn
market capitalisation
1
Active mobile
>180,000
radios
2
Fixed network
1.6m
kilometres of fibre
and coa
[
ial
3
Notes:
1.
Market capitalisation at 31 March 2022.
2.
Group including VodafoneZiggo and Safaricom.
3.
Group including Safaricom.
4.
Africa including 100% Safaricom.
Share of service revenue
We recognise the importance of local, in-market scale
and capabilities, but also drive further value from our
Group scale and breadth of our footprint.
Our retail and service operations are split across
three
b
broad business lines: Europe Consumer,
9
odafone
%
usiness and
$
frica Consumer.
Our
b
biggest
b
market is Germany.
Strategic report
Governance
Financials
Other information
3
Vodafone Group Plc
Annual Report 2022
How we govern
How we measure success
Governance
The Board held seven scheduled meetings this year to discuss key strategic
matters, our purpose and culture, our
{
people and stakeholder interests.
The
Nominations and Governance Committee
evaluates the
composition and performance of
{
the Board and ensures an appropriate
balance of independence, skills, knowledge, experience and diversity.
The
Audit and Risk Committee
provides effective governance
over
{
the
{
appropriateness of financial reporting of the Group, including
the
{
adequacy of related disclosures, the performance of the internal audit
function and the external auditor and oversight of the Group’s systems of
internal control, risk management framework and compliance activities.
The
Remuneration Committee
advises the Board on policies for executive
remuneration and reward packages for individual Executive
{
Directors.
The
{
Committee also oversees general pay practices across the Group.
The
Environmental, Social and Governance (‘ESG’) Committee
oversees our ESG programme, including our purpose pillars, sustainability
and responsible business practices, and our contribution to the societies
we operate in under our social contract.
Read more on
pages 80 to 92
Financial targets
The Group provides guidance on Ad
M
usted EBITDAaL
1
and Ad
M
usted free
cash flow
1
.
Senior management incentive plans include the following measures:
organic service revenue

ad
M
usted EBIT

ad
M
usted free cash flow

customer
appreciation metrics; relative total shareholder return; and ESG measures.
Read more on
pages 110 to 112
Return on capital employed (‘ROCE’)
This is a key focus for the Group and reflects how efficiently we are
generating profit with the capital we deploy. Our goal is for ROCE to
exceed our cost of capital through consistent revenue growth, ongoing
margin expansion, strong cash flow conversion, and disciplined allocation
of capital.
Read more on
page 32
Operational metrics
We have a number of commercial metrics that are used to monitor
our
{
progress against our key strategic priorities and reflect the strong
underlying momentum across the business.
Read more on
page 16
Social contract
We monitor the success we have in shaping a healthier industry structure
that is pro-investment, supportive of returns, and helps build a resilient,
inclusive and sustainable digital
{
society.
Read more on
pages 6 and 9
Sustainability metrics
Our metrics are aligned to the three pillars of our purpose and the
individual initiatives that underpin each pillar.
–
Inclusion for All
: Rural connectivity, our commercial propositions for
equality, and workplace equality.
–
Planet
: Our carbon footprint across our full value chain, enabling our
customers to reduce their own emissions, and e-waste.
–
Digital Society
: Supporting SME and the digitalisation of critical
sectors, such as agriculture and healthcare.
Read more on
pages 34 to 45
Click or scan to watch our Chairman and Non-E
[
ecutive
Directors speak about their roles in short video
interviews:
investors.vodafone.com/videos
Click
b
or
b
scan to watch our privacy and
cyber e
[
perts e
[
plain
b
how we protect
customer data and our
b
networks:
investors.vodafone.com/videos
Click or scan to watch short videos showing
how
b
we help improve digital inclusion and
how we plan to reach net zero by 2040:
investors.vodafone.com/videos
Risk management
Risks are not static and as the environment changes, so do risks – some
diminish or increase, while new risks appear. We continuously review and
improve our risk processes in order to ensure that the Company has the
appropriate level of support in meeting its strategic ob
M
ectives.
Our risk framework
clearly defines roles and responsibilities, and
{
sets
out a consistent end-to-end process for identifying and managing risks.
We have embedded the risk framework across the Group as this allows
us
{
to take a holistic approach and to make meaningful comparisons.
Our
{
approach is continuously enhanced, enabling more dynamic risk
detection, modelling of risk interconnectedness and the use of data,
all
{
of
{
which are improving our risk visibility and our responses.
Our Board oversees principal and emerging risks
, which are reported
to the various management committees and the Board throughout the
year. Additionally, risk
{
owners are invited to present in-depth reviews to
ensure that risks are managed within the defined tolerance levels.
Read more on
pages 59 to 67
Note:
1. Ad
M
usted EBITDAaL and Ad
M
usted free cash flow are non-GAAP measures. See
{
’Non-GAAP measures’ on page 223 for more information.
Our business model is underpinned by our strong
governance and risk management framework.
We track a range of measures that reflect our financial,
operational and strategic progress and performance.
Governance
Financials
Other information
4
Vodafone Group Plc
Annual Report 2022
Strategic report
Financial results summary
2022
2021
2020
Group revenue
€m
45,580
43,809
44,974
Group service revenue
€m
38,203
37,141
37,871
Operating profit/(loss)
€m
5,664
5,097
4,099
Adjusted EBITDAaL
1
€m
15,208
14,386
14,881
Profit/(loss) for the financial year
€m
2,624
536
(455)
Basic earnings/(loss) per share
€c
7.20
0.38
(3.13)
Adjusted basic earnings per share
1
€c
11.03
8.08
5.60
Cash inflow from operating activities
€m
18,081
17,215
17,379
Adjusted free cash flow
1
€m
5,437
5,019
5,700
Borrowings less cash & cash equivalents
€m
(62,596)
(61,939)
(61,368)
2
Net debt
1
€m
(41,578)
(40,543)
(42,047)
2
Total dividends per share
€c
9.00
9.00
9.00
Customer commitments
2022
2021
2020
Best connectivity products and services
Europe mobile contract customers
3
million
66.4
65.4
64.4
Europe broadband customers
3
million
25.6
25.6
25.0
Europe Consumer converged customers
3
million
9.0
7.9
7.2
Europe mobile contract customer churn
%
13.6
13.7
14.6
4
Africa mobile customers
5
million
184.5
178.0
168.4
Africa data users
5
million
89.9
84.9
82.6
Business service revenue growth
6
%
0.8
(0.6)
0.8
Leading innovation in digital services
Europe TV subscribers
3
million
21.9
22.2
22.1
IoT SIM connections
million
150.1
123.3
102.9
Africa M-Pesa customers
5
million
52.4
48.3
41.5
Africa M-Pesa transaction volume
5
billion
19.9
15.2
12.2
Outstanding digital experiences
Digital channel sales mix
7
%
25
26
21
End-to-end TOBi completion rate
8,9
%
42.9
34.6
–
Enabling strategies
2022
2021
2020
Leading gigabit networks
5G available in European cities
3
#
294
240
97
Europe on-net gigabit capable connections
3
million
48.5
43.7
31.9
Europe on-net NGN broadband penetration
3
%
30
30
30
Simplified and most efficient operator
Pre-tax return on capital employed
1,10
%
7.2
5.5
6.3
Post-tax return on capital employed
1,10
%
5.0
3.9
3.9
Europe markets where 3G switched off
3
#
4
31
Our progress
Key Performance Indicators
Financial and non-financial performance
Notes:
1.
These line items are alternative performance measures which are non-GAAP measures.
See
{
’Non-GAAP measures’ on page 223 for more information.
2.
FY20 borrowings and net debt has been aligned to the FY21 presentation which excludes
derivative movements in cash flow hedging reserves.
3. Including
VodafoneZiggo.
4.
Excluding the impact of inactive data only SIM losses in Italy during Q3 and Q4 FY20.
5.
Africa including Safaricom.
6.
Organic growth. See page 223 for more information.
7.
Based on Germany, Italy, UK and Spain only.
8.
Group excluding Egypt.
9.
Defined as percentage of total customer contacts resolved without human interaction
through
{
TOBi.
10. We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and ii) Post-tax
ROCE which also includes our share of adjusted results in equity accounted associates and joint
ventures. See pages 230 and 231 for more information.
We measure our success by tracking key performance indicators that reflect
our strategic, operational and financial progress and performance.
Strategic report
Governance
Financials
Other information
5
Vodafone Group Plc
Annual Report 2022
Our people
2022
2021
2020
Average number of employees and contractors
1
thousand
104
105
104
Employee engagement index
2
%
73
74
77
Employee turnover rate (voluntary)
%
14
81
2
Women on the Board
%
50
45
42
Women in management and senior leadership roles
%
32
32
31
Women in total workforce
%
40
40
39
Inclusion for All
2022
2021
2020
4G population coverage (outdoor 1Mbps) – Europe
%
98
3
98
4
97
4
4G population coverage (outdoor 1Mbps) – Africa
5
%
65
62
53
6
Estimated number of additional female customers in Africa
7
& Turkey since 2016
million
21.6
15.9
9.6
Planet
8
2022
2021
2020
Energy use
Total electricity cost
€m
846
760
–
Total energy use
GWh
5,926
5,997
5,897
Energy use on base stations & technology centres
%
96
96
95
Purchased electricity from renewable sources (Group)
%
77
55
23
Purchased electricity from renewable sources (Europe)
%
96
79
33
Greenhouse gas emissions (‘GHGs’)
Total Scope 1 and Scope 2 GHG emissions (market-based method)
m tonnes CO
2
e
1.09
1.42
2.01
Total Scope 3 GHG emissions
m tonnes CO
2
e
9.2
9.4
9.5
Total customer emissions avoided due to our IoT platform
m tonnes CO
2
e
15.6
7.1
6.9
Waste
Total waste (including hazardous waste)
metric tonnes
8,800
7,900
9,500
Network waste recovered and recycled
%
99
99
99
Digital Society
2022
2021
2020
Cumulative V-Hub unique users
million
3.6
1.1
–
Connected Farmer users
million
2.9
2.1
–
Responsible business
2022
2021
2020
Code of Conduct
Completed
n
Doing What’s Right’ employee training
%
89
84
92
Number of
n
Speak Up’ reports
#
642
623
602
Health & safety
Number of lost-time employee incidents
#
12
73
3
Lost time incident rate per 1,000 employees
#
0.11
0.06
0.35
Responsible supply chain
Total spend
€bn
24
24
24
Direct suppliers
thousand
9
11
11
Number of site assessments (conducted by Vodafone or Joint Audit Cooperation)
#
71
76
74
Tax and economic contribution
Total tax and economic contribution
9
€bn
–
9.6
9.4
Notes:
1.
Calculation considers employee pro-rated headcount.
2.
Our employee engagement index is based on a weighted average index of responses to
three
{
questions: satisfaction working at Vodafone, experiencing positive emotions at work,
and
{
recommending us as an employer.
3.
Excluding Vodafone Ziggo and including Turkey.
4.
Includes Vodafone Ziggo.
5.
Based on coverage in Africa, including Egypt and Ghana. Excludes Safaricom.
6. Excludes
Ghana.
7.
Africa including Egypt, Ghana and Safaricom.
8.
Data calculated using local market actual or estimated data sources from invoices, purchasing
requisitions, direct data measurement and estimations. Carbon emissions calculated in line with
GHG Protocol standards. Scope 2 emissions are reported using the market-based methodology.
For full methodology see our ESG Addendum 2022.
9.
Includes direct taxes, non-taxation based revenue mechanisms, such as payments for the
right
{
to use spectrum, and indirect taxes collected on behalf of governments around the world,
excludes joint ventures and associates. Our tax report for 2022 will be published in the next
year
{
following the submission of our tax returns and payment of all applicable taxes. For more
information, refer to our Tax and Economic Contribution reports, available at: vodafone.com/tax.
Purpose, sustainability and responsible business
We want to enable an inclusive and sustainable digital society. To underpin the delivery of our purpose,
we
b
ensure that we operate in a responsible way.
$
cting lawfully and with integrity is critical to our
long-term success.
Strategic report
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Other information
6
Vodafone Group Plc
Annual Report 2022
Enabling a digital society in Europe and Africa
As society begins to recover from the COVID-19 pandemic
and with the backdrop of the war in Ukraine very much in
our minds, it is more important than ever to bring people
together, and to work together to advance an
d
b
improve
the world we live in. This is at
b
the heart of our purpose
Ǿ
ȁ
we
b
connect for a better future
Ȃ
with our networks,
services and platforms increasingly being at the heart
of
b
global society.
As I reflect back on my first full year as the Chairman of your Vodafone Board,
I
{
am proud of how our colleagues have navigated the pandemic and supported
the societies in which we operate. It is also clear that our growth strategy
is
{
working, notwithstanding the overall economic impacts of COVID-19.
I
{
am
{
confident that we are in a strong position to meet the challenges and
opportunities ahead. The key is that we continue to execute consistently and
improve returns for our shareholders at pace. This is a main area of focus for
your Board and I’m pleased with the progress we have made this year.
Consistent financial performance
Our FY22 financial results demonstrate the sustainable and broad-based
growth engine that we are building at Vodafone. We reported growth
in
{
revenue, profits, cash flow and return on capital this year – therefore
already
{
delivering against our medium-term financial ambitions.
Total revenue increased by 4% to €45.6 billion, with Group organic service
revenue growing by 2.6% this year. This was driven by consistent growth
across both Europe and Africa. Combined with our ongoing cost efficiency
measures, as we continue to leverage the benefits of our Group scale,
this
{
drove a 5% increase in Adjusted EBITDAaL. I’m also encouraged to
see
{
a
{
marked improvement in return on capital employed (
n
ROCE’), a key
metric for the Group, which improved by 1.7 percentage points to 7.2% on
a
{
pre-tax basis. Group operating profit increased by 11% to €5.7 billion and
basic earnings per share increased to 7.20 eurocents.
This good financial performance and our robust financial position lead us to
declare a total dividend per share of 9.0 eurocents for the year, implying a
final dividend per share of 4.5 eurocents which will be paid on 5 August 2022
following shareholder approval at our Annual General Meeting (
n
AGM’).
Board diversity
I strongly believe that diversity in all its forms leads to more productive
and
{
balanced Board discussions. I am therefore delighted to welcome
Deborah Kerr as a Non-Executive Director. A further three Non-Executive
Directors, Stephen Carter, Delphine Ernotte Cunci and Simon Segars, will
also be appointed to the Board following our AGM, subject to shareholder
approval. These appointments further improve the composition of our Board.
Deborah has
{
extensive experience of the technology sector and a track
record of
{
successfully transforming global enterprise software and service
companies
{
across various industries. Stephen has a track record of value
creation across a variety of industries and he has extensive commercial and
regulatory experience in the telecoms sector. Delphine has considerable
experience
{
in the telecommunications sector and, more recently, in media
{
and
technology. Simon brings significant experience and insights on
{
technology
trends and how these are reshaping industry landscapes.
Over the next 18 months there will be a number of scheduled retirements
from the Board. As part of this natural refresh, my ambition is to further
enhance the Board’s experience within the telecommunications and
technology sectors, reflecting the strategic priorities of the Group. I look
forward to updating you on our progress over the next year.
ESG Committee
ESG is at the core of our purpose and is central to everything that we do.
Last
{
year, I announced our intention to create a new ESG Committee to
oversee our strategy and monitor our progress in this key area. I am delighted t
o
say the Committee has now been established and held its first two meetings
during FY22, as well as meeting jointly with the Audit and Risk Committee
to
{
review our ESG disclosures in this Annual Report. I believe this enhanced
oversight of ESG matters will support the long-term success of Vodafone.
Supporting Europe and Africa’s digital ambitions
Digital connectivity, services and technologies are transforming the way
our economies and societies function. Increasingly, digitalisation does
not
{
only determine the competitiveness of companies, but also of
nations
{
and continents.
Europe is at the cusp of embracing next-generation digital connectivity,
such as 5G, to remain globally competitive and maintain its leadership
in
{
key industrial sectors.
We are ready to play our part. Europe’s success on its digital transition
will
{
be our success. We also believe more can and should be done in
partnership with governments, in line with our social contract. Such
partnerships should build on our collective strengths, but also be honest
about our starting point. Despite the ever-growing importance of fast and
reliable connectivity, Europe is increasingly lagging behind other regions
on 5G, not only pioneering nations like South Korea, Japan and US but
also Australia and China. In fact, Europe is at risk of missing its own
Digital
{
Decade targets.
Vodafone is firmly committed to delivering Europe’s digital ambitions,
ensuring it remains truly competitive for the future. However, if Europe is
to avoid being left behind, modernising and investing in its critical digital
connectivity infrastructure must be a top priority. All policies should now
be tuned to serve this overarching objective.
We see encouraging signs of improving policy in some of our markets,
which is most welcomed. EU Recovery Funding (
n
ERF’) is also providing
an
{
important stepping-stone to accelerate digital investments in Europe.
However, in the absence of a comprehensive policy approach to promote
digital connectivity, any such government funding will only partially
address the growing investment gaps.
Meanwhile, in Africa, smartphone penetration, 4G connectivity and financial
inclusion through mobile technology will accelerate its sustainable
development and help diversify its economies. However, most African
countries have yet to begin the rollout of 5G and fibre broadband. Investment
in next-generation connectivity and digital services can act as
{
the springboard
for further economic development, to help close the economic divide
with Europe, North America and East Asia. As Europe is
{
set to benefit
from
{
the ERF, we are exploring partnerships with international financial
institutions to identify similar co-funding opportunities in Africa.
Our social contract underpins our approach to partner with governments
across Europe and Africa to ensure our societies are truly fit for the
digital
{
age. This will enable the conditions that support a more sustainable,
pro-investment environment, in turn safeguarding our economies’ global
competitiveness in an increasingly 5G world.
Outlook
On behalf of the Board, I would like to thank all of our colleagues who
have continued to work tirelessly to support our customers and society
– ensuring they remain reliably connected, as well as our shareholders
for
{
their continued support. As we enter FY23, we will continue to execute
on our strategy at pace, building on the good momentum we achieved
this year. While the external environment remains uncertain, we are
well
{
equipped to respond to the challenges that may come, and we will
continue to play a key role in supporting the development of the societies
in which we operate.
Jean-François van Boxmeer
Chairman
Scan or click to watch our Chairman, Jean-François
van
%
o
[
meer, share his views on
b
Vodafone:
investors.vodafone.com/videos
Chairman’s message
7
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Chief Executive’s statement
Good financial performance with growth
in
{
revenues, profits and cash flows
We delivered a good financial performance in the
year
b
with growth in revenues, profits and cash flows,
in line with our medium-term financial ambitions.
Our
b
organic growth underpinned a step-change in our
return on capital, which improved by 170bps to 7.2%.
Whilst we are not immune to the macroeconomic challenges in Europe
and Africa, we are positioned well to manage them and we expect to
deliver a resilient financial performance in the year ahead.
Our near-term operational and portfolio priorities remain unchanged from
those communicated 6 months ago. We are focused on improving the
commercial performance in Germany, actively pursuing opportunities
with Vantage Towers and strengthening our market positions in Europe.
These actions, together with the simplification of our portfolio and the
ongoing delivery of our organic growth strategy, will create further value
for our shareholders.
Nick Read
Chief Executive
Clear near-term operational priorities
Strengthen commercial
momentum in Germany
The largest
Gigabit footprint
in Germany with
23.8m
homes reached with
1Gb
b
per second speed
fi
[
ed
b
line connectivity
Compelling
convergence
opportunity with only
16%
of our fixed connectivity
customers also taking a
mobile product
Our 5G network
is now available to
>45m
customers across
the country
Accelerate operational
transformation in Spain
Effective second brand
Lowi, with
1.5m
mobile customers
Strong Business
position
b
with
c.32%
mobile customer
market share
Structural
opportunities
b
with
€0.2bn
reduction in customer
costs over three years
Position Vodafone
Business to maximise
E
8{
recovery funding
opportunities
Market-leading
position in
b
Business connectivity
>30%
mobile revenue market
share across our three
largest European markets
Strong track record
in
b
Business digital
services
b
with
>15%
growth in IoT and cloud &
security product revenues
Invested in new
products
b
and digital
services, with
€1.5bn
capex investment in
growth
b
areas in FY22
Scan or click to watch our Chief Executive,
Nick Read, summarise
b
our performance this year:
investors.vodafone.com/videos
Governance
Financials
Other information
8
Vodafone Group Plc
Annual Report 2022
Strategic report
Operating in a rapidly changing industry
Market and strategy
The long-term trends that are shaping our industry
and driving new growth opportunities.
Mega trends
The demands of our stakeholders are
continuously
b
evolving. Engaging with them
regularly
b
is fundamental to how we operate.
Our stakeholders
Our customers
1
We are focused on deepening our
engagement with our customers to
develop
{
long-term valuable and sustainable
relationships. Vodafone is one of the largest
mobile and fixed network operators in Europe
and a leading global IoT connectivity provider.
We have millions of customers across Europe
and Africa,
{
ranging from individual consumers
to
{
large multinational corporates.
323m
mobile customers
28m
broadband customers
22m
TV customers
Our people
Our people are critical to the successful
delivery of our strategy. It is essential they
are engaged and embrace our purpose
and
{
values.
104,000
employees and
contractors
Our suppliers
Our suppliers provide us with the products
and
{
services we need to deliver our strategy
and connect our customers. In total we have
around 9,000 suppliers who partner with us,
ranging from start-ups and small businesses
to large multinational companies.
9,000
suppliers
Our local communities
and
{
non-governmental
organisations (‘NGOs’)
We believe the long-term success of our
business is closely tied to the success of
the
{
communities in which we operate. We
interact with local communities and NGOs,
seeking to be a force for good wherever
we
{
operate.
€3m
donated in
contributions and
services in-kind in
response to the war
in Ukraine
Government and regulators
Our relationship with governments and
regulators is important to ensure policies are
developed in the interests of our customers
and the industry, while also enabling them
to
{
better understand the positive impact
we
{
can have on the environment and
communities
{
we operate in.
€9.6bn
total tax and
economic
contribution
in
b
2021
Our investors
Our investors include individual and
institutional
{
shareholders, as well as debt
investors. We maintain an active dialogue
with
{
our investors through our extensive
investor relations programme.
1,400
interactions
with
b
institutional
investors in FY22
Digital services and next-generation connectivity are increasingly central
{
to
everything we do – and will be the driving forces that redefine
{
relationships
between sectors, employers, employees, customers,
and friends and
family. There are a number of mega trends which we believe will shape
our industry in the years ahead.
Hybrid working
Last year’s trend of remote working has seen a subtle shift and
hybrid
{
working is now becoming a permanent feature of the modern
working environment. The continued investment in reliable, high-speed
connections for both businesses and consumers has proved to be a key
factor in this transition.
Connected devices
The demand for connected devices, beyond smartphones, is growing
rapidly. The Internet of Things (
n
IoT’) is expected to drive huge operational
efficiencies, deliver real-time information, and can be applied to a broad
range of use cases. An increasing number of connected devices are also
communicating and trading with each other, which presents businesses
with exciting opportunities to compete in new online markets (the
n
Economy of Things’).
Adoption of cloud technology
Businesses and consumers are increasingly moving away from using
their own hardware and device-specific software and instead using more
efficient, shared capacity and services over the cloud.
Digital and green transformation for the private and public sector
The European Union has launched a series of funding programmes with
€723.8 billion available under the banner
n
NextGenerationEU’. This includes
a Recovery and Resilience facility, which combines €385.8 billion
of loans
and €338 billion of grants available to European Union Member States.
Of these grants, approximately 70% are being allocated to European
Union Member States in which Vodafone has an operating presence.
These grants are planned to be 70% committed by the end of
{
2022.
The
{
range of funding presents a direct and indirect opportunity given
that at least 20% of the total funding is planned to support the
European
Commission’s digital transformation agenda. In order to remain
competitive
and fulfil their social and environmental commitments, companies are
also increasingly looking to digitalise their operations to
{
become more
efficient and reduce their environmental impact.
Digital payments and financial services
The trend towards more digital forms of payment is growing, with a
broader range of financial services now being delivered through apps
and online. In Africa, the growth in smartphone penetration is allowing
consumers to access digital financial services for the first time, enabling
money transfers, loans, insurance and even merchant payments.
Read more
on pages 14 to 15
Read more
on pages 12 to 13
Note:
1.
Includes VodafoneZiggo and Safaricom.
Click or scan to watch our digital services
and experiences
b
investor brie
ȣ
ng:
investors.vodafone.com/digital-services
Strategic report
Governance
Financials
Other information
9
Vodafone Group Plc
Annual Report 2022
Our strategy focuses on driving shareholder returns through growth. This will be delivered through three
customer commitments and three enabling strategies, all of which work together towards realising our vision
to
b
become a new generation connectivity and digital services provider for Europe and Africa, enabling an
inclusive and sustainable digital society. We have made strong progress and executed at pace during the year.
Our progress
Scan or click to watch our Chief Executive,
Nick Read, summarise our performance this year:
investors.vodafone.com/videos
Our customer commitments
Best connectivity products and services
Grow revenue through providing the best core connectivity products and
services in each of our markets for both consumers and businesses.
Flexible contract
pricing structures in
3
markets
5G launched
and live in
>300
cities across
14 markets
1
Leading innovation in digital services
Leveraging our unique platforms and partnering with leading technology firms
to provide customers with a
n
best on Vodafone’ user experience.
VodaPay ‘super-app’
now with
1.6m
registered users
V-Hub
supported
2.5m
unique visitors
with digital tools
Outstanding digital experiences
Using our leading digital architecture to provide a seamless customer experience
across all channels – app, online, retail and physical delivery at home.
MyVodafone app
used by
52m
customers
Super-WiFi
launched in
4
countries
Read more about our people strategy
on pages 21 to 23
Our people strategy
Our people strategy accelerates our transformation, by seeking to create an inclusive environment for growth, where everyone ha
s the opportunity
to
{
thrive. It is based on four pillars:
The Spirit of Vodafone
Diverse talent and future ready skills
Agile and efficient operating model
Digital and personalised experience
Notes:
1.
Group including VodafoneZiggo and Safaricom.
2.
Net OpEx savings Europe, Common Functions and Vantage Towers.
Our enabling strategies
Simplified and most efficient operator
Delivering further efficiencies through digital transformation, standardisation
of products and procedures, and automation of processes at scale.
Pre-tax ROCE
increased by
170bps
to 7.2%
Cumulative European
net opex savings
2
€1.5bn
between FY19 and FY22
Social contract shaping digital society
Influencing policy and regulation to shape a more healthy industry structure,
and build a resilient, inclusive and sustainable digital society.
Rational spectrum
auctions in
3
markets during FY22
Encouraging start
in accessing
EU Recovery
Funding
Leading gigabit networks
Maintaining our leading gigabit networks as we provide our
{
customers
with the best connectivity products and
n
best
{
on Vodafone’ user experience.
Best/co-best
network quality
3
in
13
markets
Marketable
NGN homes of
145m
across our footprint
4
3.
Data lead/co-lead mobile network quality.
4.
Europe including VodafoneZiggo.
Governance
Financials
Other information
10
Vodafone Group Plc
Annual Report 2022
Strategic report
Structured for value creation
Business model
Infrastructure assets
Retail and customer service
Europe Consumer
1
We are a leading converged connectivity provider in Europe, with nearly
9
{
million converged customers, 114 million mobile connections and
145
{
million marketable NGN broadband homes.
Vodafone Business
We serve over 6 million private and public sector customers of all sizes.
We offer core connectivity services, as well as new technologies such as
IoT, cloud & security, and unified communications.
African Consumer
2
We are a leading provider of mobile data and financial services in Africa.
We have 185 million mobile customers and enable access to financial
services for 66 million people via our financial services platforms.
€20 billion
Europe Consumer service revenue
€10 billion
Business service revenue
€6 billion
African Consumer service revenue
Shared operations
1.
We have consolidated our supplier management functions into a
single
{
unit, the
Vodafone Procurement Company
.
2.
Our
integrated IT operations, network operating centres
and
back-office activities
provide standardisation across our markets.
3.
Vodafone Roaming Services
manages our global roaming
relationships,
Vodafone Carrier Services
provides wholesale
connectivity services, and our
Partner Markets
team extends our
reach and builds strategic alliances with operators in 48 countries.
2. Network
& digital
operations
3. Inter-
network
operations
1. Supplier
management
Growth platforms
Our converged connectivity infrastructure is largely managed through
three components: passive mobile, active mobile, and fixed and transport.
Passive mobile:
We manage over 100,000 towers across markets
in Europe and Africa. Our European towers are primarily held and
operated through Vantage Towers.
Active mobile:
We own and operate our own active mobile network,
which includes more than 180,000 radios in Europe and Africa.
We
{
also have spectrum licences in all of our markets.
Fixed and transport:
Our infrastructure comprises connectivity
networks, mobile backhaul, and international terrestrial and submarine
connections. The majority of our fixed connectivity networks are
based on fibre infrastructure, particularly high-demand nodes.
2
3
We have evolved our business model and organisational structures to operate in a more streamlined and agile
matrix, recognising the importance of local, in-market scale and capabilities, as well as driving further value from
the scale and breadth of our footprint. We manage our Group through four Group-wide operational layers.
2
2
3
1
150 million
IoT SIM connections (FY21: 123 million)
52.4 million
M-Pesa customers
1
(FY21: 48.3 million)
Digital services
We deepen our customer relationships through our growth platforms
which include Vodafone TV, home services, device lifecycle services and
loyalty applications.
Internet of Things
Our IoT service was established in 2008 and has grown to be the largest
IoT connectivity provider globally.
Financial services
Together with Vodacom’s own platform and our African payment
platform M-Pesa, we provide a range of financial services, as well as
business and merchant payment services.
>50 million
Customers subscribing to a digital service
1
Notes:
1.
Including VodafoneZiggo.
2.
Africa including 100% Safaricom.
Strategic report
Governance
Financials
Other information
11
Vodafone Group Plc
Annual Report 2022
In-market autonomy and agility
Our local in-country teams are best placed to understand the needs of
their local market and make appropriate decisions.
Full P&L
accountability
–
In-country finance, HR and legal teams
–
Local capital allocation and people decisions
Commercial
and marketing
–
In-country control of pricing, product and marketing
–
Each country operation remains agile in
competitive markets
–
Local markets share best practices around
the
{
Group, for example:
–
Investment-linked pricing structures in
five
{
markets
–
Localised second-brands in six markets
Customer
operations
–
Local control of channel and customer journeys
–
Respond to local market characteristics and
customer preferences
–
Local markets share best practices around
the
{
Group, for example:
–
Optimising local digital/traditional channel mix
–
Localisation of MyVodafone App in 12 markets
Corporate oversight
In-market operations and regionally-scaled standardisation
overseen by lean and efficient corporate team.
Regional standardisation
delivering scale benefits
We are structured to deliver efficient operational support through
regionally-scaled services as the connectivity value chain has a high
degree of replicable and repeatable services across our markets.
Networks
–
Integrated European network and IT/digital teams
drive efficiency, increase speed of execution,
standardise key processes, and codify the best
solutions for implementation across our markets
–
Improvement in network test results
–
42% reduction in network incidents
Procurement
–
Combined €24 billion purchasing power of our
operations in Europe and Africa
–
Independent operators paying to access our
pooled procurement through our Partner
Markets business
–
Double-digit savings on Liberty procurement
post-acquisition
Shared
services
–
Four shared service centres in Egypt, India and
Central and Eastern Europe
–
Approximately 32% of our people work in
shared
{
operations
–
Automating processes through digitalisation
–
8,200 role efficiencies over the last four years
Our medium-term ambition
Value model
Medium-term ambition
Consistent revenue
{
growth
Growth in both Europe & Africa
Ongoing
margin
expansion
Mid-single digit adjusted
EBITDAaL
2
growth
Good cash
conversion
Mid-single digit adjusted
FCF
2
{
growth
Disciplined
capital allocation
Net debt to adjusted EBITDAaL
2
2.5-3.0x
Sustainable
value
creation
ROCE
2,3
greater than WACC
A minimum dividend of 9.00
eurocents per share per annum
Notes:
1.
Excludes Vantage Towers’ growth capital expenditure.
2.
These line items are non-GAAP measures. See
{
’Non-GAAP measures’ on page 223
for
{
more
{
information.
3.
Pre-tax return on capital employed (controlled).
+
+
+
=
1
€8 billion
cash capital additions
1
in
b
FY22
2
2.7x
net debt/adjusted EBITDAaL
3
9.0 eurocents
dividends per share in FY22
Capital allocation
Our capital allocation framework enables us to balance our three capital
allocation priorities.
Maintain a robust balance sheet
Shareholder distribution
We are organised to ensure the optimal balance
between local agility and regional scale, which
delivers significant benefits through standardisation.
Our disciplined approach to capital allocation
and
b
portfolio optimisation supports our
mid-term ambitions.
Balancing regional scale and local agility
Our approach
Portfolio optimisation
We continue to follow our three principles when managing our portfolio:
1
We focus on the converged connectivity markets in
Europe, and mobile data and payments in Africa

2
We aim to achieve returns above the local cost of capital
in all of our markets

and
3
We consider whether we are the best owner and whether
there are any pragmatic and value-creating alternatives.
Invest in critical infrastructure
Strategic report
Governance
Financials
Other information
12
Vodafone Group Plc
Annual Report 2022
Note:
1.
GSMA Mobile Economy Report 2022.
Digital services and next-generation connectivity are
increasingly central to everything we do – and will be
the driving forces that redefine relationships between
sectors, employers, employees, customers, and
friends and family.
There are five
ȁ
mega trends
Ȃ
that we believe will
shape
b
our industry in the years ahead: hybrid working,
connected devices, adoption of cloud technology,
the digital and green transformation of public and
private sectors, and digital payments.
Hybrid working
Over the last couple of years we have seen a dramatic shift in working
patterns. Post the pandemic companies are now moving from largely
office based environments to more
n
hybrid’ working models, thereby
providing their employees with much greater flexibility as to how and
where they work, whilst still ensuring high or even increased levels
of
{
productivity. This change in working patterns is driving increased
demand
{
for fast and reliable fixed and mobile networks, as well as a
range
{
of supporting services such as cloud-based productivity and
communication platforms.
The majority of large multinationals already have remote working
capabilities, however they are now moving to more efficient technologies.
Smaller companies, ranging from corporates to small and medium-sized
offices, rely on network operators such as Vodafone to provide secure
remote working solutions. These solutions include virtual private
networks, unified communication services and the migration of
enterprise
{
applications to the cloud. This is vital for business continuity,
and it provides network operators with an opportunity to further deepen
their customer relationships by offering a broad range of services.
Connected devices
The world is becoming ever more connected, and it is not just driven
by
{
smartphones. A wide range of new devices, across all sectors and
applications, are increasingly being connected to the internet. These
connected devices, known as the Internet of Things (
n
IoT’) are expected
to
{
increase by around 55% to over 23 billion devices by 2025
1
. This is
driven by continued reductions in the cost of computing components,
advances in cross-device operability and software, and the
{
near-ubiquity
of networks.
For consumers, there is a growing range of applications such as
smartwatches, tracking devices for pets, bags and bicycles, and
connected vehicles – which can lower insurance premiums and
enable
{
a
{
range of advanced in-vehicle solutions.
For businesses, the demand for IoT and potential use cases is even more
evident. These include solutions such as automated monitoring of energy
usage across national grids, tracking consumption in smart buildings and
detecting traffic and congestion in cities.
Mega trends
Long-term trends shaping our industry
In environments that are more localised, such as factories and ports,
network operators are building and running Mobile Private Networks
(
n
MPNs’). MPNs offer corporate customers unparalleled security and
bespoke network control. As an example, MPNs enable autonomous
factories to connect to thousands of robots, enabling them to work
in
{
a
{
synchronised way. Once a product leaves the factory it can also
be
{
tracked seamlessly through global supply chain management
applications, whether it is delivered through the post, a vehicle or
even
{
via
{
drones.
In areas where the same solution can be deployed across multiple
sectors, network operators are moving beyond connectivity to
provide
{
complex end-to-end hardware and software solutions such
as
{
surveillance, smart metering and remote monitoring; and it is often
more efficient for these solutions to be created in-house. Scaled operators
can leverage their unique position to co-create or partner with nimble
start-ups at attractive economics.
As the number of IoT devices increases, physical assets are also
communicating with each other in real-time and new digital markets
are
{
being established. This is leading to the Economy of Things, where
connected devices securely trade with each other on a user’s behalf,
without human intervention. This presents businesses across multiple
industries with exciting opportunities to transform goods into tradeable
digital assets which can compete in new disruptive online markets.
Adoption of cloud technology
Over the last decade, large technology companies have invested heavily
in advanced centralised data storage and processing capabilities that
organisations and consumers can access remotely through connectivity
services (commonly termed
n
cloud’ technology). As a result, organisations
and consumers are increasingly moving away from using their own
expensive hardware and device-specific software to using more efficient
shared hardware capacity or services over the cloud. This is popular as it
allows upfront capital investment savings, the ability to efficiently scale
resources to meet demand, systems that can be easily updated and
increased resiliency. This is driving demand for fast, reliable and secure
connectivity with lower latency.
Many small businesses increasingly understand the benefits of
cloud
{
technology, however, they lack the technical expertise or direct
relationships with large enterprise and cloud specialists. This presents an
opportunity for network operators, particularly those with strong existing
relationships, as they can effectively help customers navigate their move
to the cloud at scale.
Click or scan to watch our digital services and
experiences
b
investor brie
ȣ
ng:
investors.vodafone.com/digital-services
13
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Note:
1. GSMA State of the Industry Report on Mobile Money 2022.
Click or scan to watch our digital services
and experiences
b
investor brie
ȣ
ng:
investors.vodafone.com/digital-services
Digital and green transformation of the
public
{
and private sectors
As part of the fiscal response to the COVID-19 pandemic, the
European
{
Union has launched a series of funding programmes
with
{
€723.8 billion
available under the banner
n
NextGenerationEU’.
This
{
includes
{
the Recovery
and Resilience facility, which combines
€385.5
{
billion of loans and €338 billion of grants available to European
Union Member States. Of these grants, approximately 70% are being
allocated to European Union Member States in which Vodafone has
an
{
operating presence. These grants are planned to be 70% committed
by the end of
{
2022. The
{
range of funding presents a direct and indirect
opportunity given that at least 20% of the total funding is planned to
support the European Commission’s digital transformation agenda.
The UK and many of our African markets have similar stimulus measures
in place. These support measures will help connect schools, hospitals and
businesses to gigabit networks and provide hardware, such as tablets, to
millions of school children.
Similarly, the European Union has committed to be carbon-neutral by
2050. Mobile network operators across Europe will be able to benefit
from these funds as they seek to limit their impact on the climate, and
help their customers from across the private and public sectors reduce
their own energy use and carbon emissions.
Small and medium-sized enterprises (
n
SMEs’) in Europe can often lag
behind in terms of digital adoption. However, under various government-
led support mechanisms, SMEs will be eligible for vouchers, grants
and
{
loans to transition to eCommerce, upskill employees, and move
to
{
cloud-based solutions whilst ensuring they are secure as they do so.
SMEs
{
will look to trusted and experienced network operators which can
offer a full suite of solutions, whilst also help them navigate technical and
regulatory processes. Finally, to ensure the benefits of these projects are
spread equitably, funding is also being allocated towards rural inclusion
to
{
subsidise the building of network infrastructure where it is currently
uneconomical for operators to do so.
Read more about our purpose to enable an inclusive
and
b
sustainable digital society on pages 41 to 45
Digital payments
Businesses in Europe continue to expand and migrate sales channels
from physical premises to online channels such as websites and
mobile
{
applications. As a result, businesses increasingly transact
through
{
mobile-enabled payment services which remove the
need
{
for
{
legacy fixed
{
sales terminals. Consequently, businesses
demand
{
reliable and secure mobile connectivity. Consumers are also
increasingly
{
transitioning away from using cash, to digital payment
methods conducted directly via mobile phones or smartwatches,
further
{
increasing the importance of mobile networks.
In Africa, digital payments are primarily conducted via mobile phones
through payment networks owned and operated by network operators,
and the annual value of mobile money transactions has reached a key
milestone in 2021 with one trillion transactions globally
1
. Consumers
are
{
also moving beyond peer-to-peer transactions as rising smartphone
penetration drives the adoption of mobile payment applications. Network
operators and a range of FinTech startups are using these applications to
sell additional financial services focused products, ranging from advances
on mobile airtime and device insurance to more complex offerings
such
{
as life insurance, loans and e-commerce marketplaces. This plays
a
{
critical role in improving financial inclusion for millions of people across
Africa where the traditional banking sector has not been able to reach.
Businesses are also increasingly reliant on operator-owned payment
infrastructure for consumer-to-business payments, but also for large
business-to-business transfers. These payment networks drive scale
benefits for the largest operators by allowing customers to save on
transaction fees whilst also driving both business and consumer
customers to seek reliable and secure networks.
Click or scan to learn more about our IoT leadership and
evolution in our Vodafone Business investor brie
ȣ
ng:
investors.vodafone.com/vbbrie
ż
ng
Larger corporates, which may already use the cloud today, are
progressively moving away from complex systems based on their own
servers or single cloud solutions, to multi-cloud offers, sold by network
operators and their partners. This approach reduces supplier risk and
increases corporate agility and resilience. Large corporates continue to
drive higher demand for robust, secure and efficient connectivity services
as they transition from their own legacy hardware and services. Cloud
providers also recognise the criticality of telecommunications networks.
Many cloud providers are partnering with the largest network operators,
sometimes through revenue sharing agreements, to develop edge
computing solutions which integrate data centres at the edge of
telecommunication networks to deliver customers reduced latency.
The
{
opportunity is significant as the total addressable market in
business-to-business cloud & security is expected to reach €63 billion
by
{
2025 compared to €45 billion today.
Consumers use cloud solutions for a variety of reasons, including digital
storage, online media consumption or interacting through the metaverse.
Consumer hardware is also now being replaced by cloud-first solutions.
For example, new cloud-based gaming services allow consumers to
stream complex, bandwidth-heavy computer games directly to their
phones or tablets, without the need for expensive dedicated hardware.
Fast and reliable connectivity will act as a catalyst for further innovation
and consumer applications, many of which do not currently exist today.
Read more about how Vodafone
Ȃ
s leading gigabit connectivity
infrastructure supports to the digital society on pages 44 to 45
Strategic report
Governance
Financials
Other information
14
Vodafone Group Plc
Annual Report 2022
Regular engagement ensures we operate in a
balanced and responsible way, both in the short
and
b
longer term.
We are committed to maintaining good communications and building
positive relationships with all of our stakeholders, as we see this as essential
to strengthening our sustainable business. We have summarised our
interactions with key stakeholders during the year below.
Vodafone is required to provide information on how the Directors have
performed their duty under section 172 of the Companies Act 2006 to
promote the success of Vodafone, including how those matters and the
interests of Vodafone’s key stakeholders have been taken into account
by
{
the Directors. The engagement mechanisms directly involving the
Directors are indicated below with a
B
symbol.
Our customers
We are focused on deepening our engagement with our customers
to
{
develop long-term valuable and sustainable relationships. We have
hundreds of millions of customers across Europe and Africa, ranging
from
{
individual consumers to large multinational corporates.
How did we engage with them?
–
Digital channels (MyVodafone app, TOBi chatbots, social media
interaction and the Vodafone website)
–
Call centres
–
Branded retail stores
What were the key topics raised?
–
Better value offerings
–
Faster data networks and wider coverage
–
Making it simple and quick to deal with us
–
Managing the challenge of data-usage transparency
–
Converged solutions for consumer and business customers
–
Prompt feedback/resolution on service-related issues
B
How did the Board engage?
–
The Board participated in a dedicated review of the Group’s Net
Promoter Scores, facilitated by Executive Committee members
How did we respond?
–
Launched 5G in 14 markets and expanded our 4G coverage
–
Leveraged our digital channels to support easy access for all of
our
{
customers during the COVID-19 crisis
–
Improved efficiency and functionality on MyVodafone app
–
Moved TOBi to a scaleable platform to improve speed to market
–
Continued to apply the highest safety standards possible in our
stores
{
in order to keep our customers and colleagues safe during
the
{
COVID-19 crisis
–
Added content deals to integrated internet, TV and mobile packages
–
Launched initiatives to tackle social issues such as digital poverty,
domestic violence, and loneliness
–
Established Europe’s largest network powered by renewable energy
and launched initiatives to help customers go green, including
introducing SIMs made out of recycled plastic
–
Donated SIMs and handsets, provided free connectivity, charging and
WiFi in response to the war in Ukraine
Our people
Our people are critical to the successful delivery of our strategy. It is
essential that they are engaged and embrace our purpose and values.
Throughout the year we focused on a number of areas to ensure that
everyone is highly motivated and we remained focused on wellbeing.
Stakeholder engagement
Engaging regularly with our stakeholders is
fundamental to the way we do business
How did we engage with them?
–
Regular meetings with managers
–
B
European Employee Consultative Committee
–
B
National Consultative Committee (South Africa)
–
B
Internal website and live webinars
–
B
Executive Committee discussions
–
B
Newsletters and electronic communication
–
B
Employee Speak Up channel
–
B
Global Pulse and Spirit Beat surveys
What were the key topics raised?
–
Opportunities for personal and career development
–
Communication and knowledge sharing across the Group
–
Enhancing leadership coaching capacity
–
Deepening digital skills
–
Impacts of COVID-19
–
Hybrid ways of working and return to office
–
Progress on Vodafone’s Fair Pay agenda
–
Global Pulse and Spirit Beat survey actions
B
How did the Board engage?
–
Valerie Gooding, in her capacity as Workforce Engagement Lead,
updated the Board on employee voice engagements, and the
Chief
{
Human Resources Officer provided updates on culture and
the
{
Vodafone Spirit and the delivery against people strategy (including
operating model transformation, inclusion, and hybrid ways of working)
How did we respond?
–
Provided training courses to develop new skills such as software
engineering, cyber security, data science and customer experience
–
Internal communication to staff on the impacts of COVID-19
–
Provided a range of physical and mental wellbeing services
–
Introduced hybrid ways of working and created a global office design
–
Implemented survey actions and monitored progress at Executive
Committee and Board level
–
Introduced quarterly
n
Spirit of Vodafone’ days to support personal
growth, wellbeing and connection
–
Launched a global senior leadership programme and leadership
standards for all managers
–
Raised standards for learning, talent, leadership and skills
–
Launched an integrated skills and learning platform
–
Set ethnic diversity targets, and a related action plan, including a range
of training for diversity and inclusion topics
Our suppliers
Our business is helped by around 9,000 suppliers who partner with us.
These range from start-ups and small businesses to large multinational
companies. Our suppliers provide us with the products and services we
need to deliver our strategy and connect our customers.
How did we engage with them?
–
Safety forums, events, conferences and site visits
–
Purpose criteria in tenders
–
Supplier audits and assessments
What were the key topics raised?
–
Improving health and safety standards
–
Promoting diversity and inclusion
–
Driving towards net zero emissions in supply chains
–
Supplier/product innovation
B
How did the Board engage?
–
The Board, through the Audit and Risk Committee, received updates on
the risk and resilience of our global supply chains
15
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
How did we respond?
–
Held safety forums every quarter
–
Recognised our suppliers with awards for health and safety, diversity
and inclusion and planet efforts
–
Collaborated with industry peers and suppliers through the Joint
Alliance for CSR (
n
JAC’), formerly known as the Joint Audit Cooperation
Our local communities and non-governmental
organisations (‘NGOs’)
We believe that the long-term success of our business is closely tied to
the success of the communities in which we operate. We interact with local
communities and NGOs, seeking to be a force for good wherever we operate.
How did we engage with them?
–
Through our products and services
–
Community and NGO interaction on education, health, agriculture and
inclusive finance projects, and on our humanitarian response to global
issues including the COVID-19 pandemic and war in Ukraine
–
Participation in multi-stakeholder working groups on policy issues at
the national and international level
What were the key topics raised?
–
Increasing access to connectivity and digital services, by closing the
digital divide, closing the rural gap and connecting SMEs
–
Human rights topics including child rights
–
Environmental topics including net zero and the circular economy
–
Delivery of global and national development goals including
UN
{
Sustainable Development Goals
B
How did the Board engage?
–
A comprehensive update on Vodafone’s purpose and social contract,
and presentation of Vodafone Foundation activities and progress
–
The new ESG Committee provides the Board with enhanced oversight
of ESG topics, including engagement with communities and NGOs
How did we respond?
–
Launched, and our Chief Executive chaired, a UN Broadband
Commission working group on increasing smartphone access and
co-chaired a pillar of the International Telecommunication Union’s
Partner2Connect initiative
–
Participated in partnerships and working groups on human rights
–
Participated and engaged with key environmental initiatives, including
the Science Based Targets initiative and CDP
–
Launched a response to the war in Ukraine with NGOs and charities
Governments and regulators
Our relationship with governments and regulators is important and we
hope to work together on policies impacting our industry and customers,
while also enabling them to better understand the positive impact we can
have on the environment and communities we operate in.
How did we engage with them?
–
B
Participation and attendance at company and industry meetings
with government and regulators, EU institutions, public forums and
parliamentary processes
–
B
Meetings with commissioners, ministers, elected representatives,
policy officials and regulators
–
Hosting and participating in workshops and events to improve sector
understanding on connectivity and digitalisation
–
B
Our Chairman is a member of the European Round Table for
Industry, which promotes competitiveness and prosperity and
engages
{
with European and global institutions, and governments
What were the key topics raised?
–
Regulatory and policy environment and compliance
–
Responses to COVID-19 and the war in Ukraine
–
Security and supply chain resilience
–
The digital economy and society
–
Digital society and the European Green Deal
–
Data protection and privacy
B
How did the Board engage?
–
Management updated the Board on how Vodafone worked with
governments and regulators during the COVID-19 pandemic
–
Management provided regular updates on legal and regulatory matters
How did we respond?
–
Engaged on the digital and green transformation of the EU
–
Engaged on the Digital Decade targets including the digitalisation of
industries and SMEs
–
Communications on the impact of electromagnetic fields (
n
EMF’)
–
Engaged on network investments, design and deployment
(e.g.
{
Open
{
RAN, 5G)
–
Engaged on issues such as the allocation of spectrum and the
protection of consumers
–
Discussed policy and regulatory environment that facilitates
investment in technology
–
Engaged with the EU with respect to the data economy, including data
protection, digital principles, and data sharing
Our investors
Our investors include individual and institutional shareholders as well as
debt investors. We maintain an active dialogue with our investors through
our extensive investor relations programme.
How did we engage with them?
–
B
Personal meetings, virtual roadshows, conferences
–
B
Annual & interim reports and presentations
–
B
Investor relations website used as primary digital communications
tool and is available to all shareholders (institutional and retail)
–
Four virtual investor briefings arranged since November 2020 and a
number of video interviews with Directors, with 11 hours of on-demand
video content available on our website
–
Stock Exchange News Service (
n
SENS’) announcements
–
B
Annual General Meeting (
n
AGM’)
–
B
Three investor perception studies and regular feedback survey
–
Our Registrar, Equiniti, operates a portfolio service which provides
shareholders with the ability to manage their holdings
What were the key topics raised?
–
Strategy to deliver sustained financial growth
–
Operational priorities
–
Allocation of capital
–
Portfolio optimisation
–
Corporate governance practices
–
ESG strategy, targets and reporting
–
Dividend policy
–
Deleveraging strategy
B
How did the Board engage?
–
AGM with a live webcast available to all shareholders, including the
ability to submit questions to the Board
–
The Chairman and a number of Non-Executive Directors participated in
video interviews, where they explained their roles
–
Investor roadshows are attended by the Chairman and Executive
Directors for direct Q&A sessions
How did we respond?
–
We conducted almost 1,400 investor interactions through meetings
with major institutional shareholders, debt investors, individual
shareholder groups and financial analysts, and attended conferences
–
Meetings were attended by Directors and senior management,
including our Chairman, Senior Independent Director, Chief Executive,
Chief Financial Officer, and Executive Committee members
–
Virtual investor briefings covering technology and digital services
presented by Executive Committee members and senior management
Strategic report
Governance
Financials
Other information
16
Vodafone Group Plc
Annual Report 2022
A new generation connectivity
and digital services provider
Strategic review
In May 2021, we set our ambition to reshape the
Group as a new generation connectivity and digital
services provider. Our strategy focuses on driving
shareholder returns through growth. This is being
delivered through three customer commitments
and
b
three enabling strategies, all of which work
together towards realising our
b
vision to become
a
b
new generation connectivity and digital services
provider for Europe and Africa, enabling an inclusive
and sustainable digital society.
We have made good progress with our strategy during FY22 and the table
below includes a selection of KPIs that illustrates progress in our key areas
of focus. In this section we outline:
1.
We are systematically executing our long-term organic growth strategy,
and clear plan to deliver our operational priorities;
2.
We have actions underway to balance challenging macroeconomic
conditions; and
3.
We are committed to improving shareholder returns.
Notes:
1. Including
VodafoneZiggo.
2.
Excluding the impact of inactive data only SIM losses in Italy during Q3 and Q4 FY20.
3.
Africa including Safaricom.
4.
Organic growth. See page 223 for more information.
5.
Based on Germany, Italy, UK and Spain only.
6.
Group excluding Egypt.
7.
Defined as percentage of total customer contacts resolved without human interaction
through
{
TOBi.
8.
These line items are alternative performance measures which are non-GAAP measures.
See
{
’Non-GAAP measures’ on page 223 for more information.
9.
We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and
ii)
{
Post-tax
{
ROCE which also includes our share of adjusted results in equity accounted
associates and joint ventures. See pages 230 and 231 for more information.
Scan or click to watch our Chief Executive, Nick Read,
outline our progress with our strategy:
investors.vodafone.com/videos
Executing our long-term organic growth strategy
During the year, a number of strategic initiatives enabled the progress in
our strategic KPIs, including:
–
We launched flexible contract structures in three markets, which
enable customers to select the optimal contract length and monthly
payments for their own needs;
–
We have now launched, and have next generation 5G mobile
connectivity services in 294 cities, across 11 markets in Europe, which
delivers up to gigabit downloads speeds;
–
We have launched investment-linked pricing contractual options in five
markets, and activated this option in two markets;
–
We launched the VodaPay financial services
n
super-app’ in South Africa,
which has already attracted 2.2 million downloads;
–
Our IoT and cloud & security digital services within Vodafone Business
grew by 15.3% in FY22;
–
The MyVodafone app, which enables real-time account management is
used by 52 million customers, across 12 countries;
Strategic progress summary
Customer commitments
2022
2021
2020
Best connectivity products and services
Europe mobile contract customers
1
million
66.4
65.4
64.4
Europe broadband customers
1
million
25.6
25.6
25.0
Europe Consumer converged customers
1
million
9.0
7.9
7.2
Europe mobile contract customer churn
%
13.6
13.7
14.6
2
Africa mobile customers
3
million
184.5
178.0
168.4
Africa data users
3
million
89.9
84.9
82.6
Business service revenue growth
4
%
0.8
(0.6)
0.8
Leading innovation in digital services
Europe TV subscribers
1
million
21.9
22.2
22.1
IoT SIM connections
million
150.1
123.3
102.9
Africa M-Pesa customers
3
million
52.4
48.3
41.5
Africa M-Pesa transaction volume
3
billion
19.9
15.2
12.2
Outstanding digital experiences
Digital channel sales mix
5
%
25
26
21
End-to-end TOBi completion rate
6 7
%
42.9
34.6
–
Enabling strategies
Leading gigabit networks
5G available in European cities
1
#
294
240
97
Europe on-net gigabit capable connections
1
million
48.5
43.7
31.9
Europe on-net NGN broadband penetration
1
%
30
30
30
Simplified and most efficient operator
Pre-tax return on capital employed
8 9
%
7.2
5.5
6.3
Post-tax return on capital employed
8 9
%
5.0
3.9
3.9
Europe markets where 3G switched off
1
#
431
17
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
–
Our artificial intelligence enabled assistant
n
TOBi’ is now having 32 million
conversations per month, in 14 languages, across 16 countries;
–
Our
n
V-Hub’ online portal supported 2.5 million unique visitors with
digital tools in 13 countries during FY22;
–
We have launched
n
Super-WiFi’ in 4 countries, helping deliver
superior
{
in-home WiFi performance and the option of built-in
back-up
{
4G connectivity;
–
We have decommissioned 3G mobile connectivity in four markets,
which reduces costs and enables us to reallocate spectrum to 4G
and
{
5G connectivity; and
–
Our network performance benchmarking demonstrates we have a
co-leading data position in 13 out of our 19 markets.
Operational priorities
In addition to the ongoing, systematic execution of our strategy,
we
{
have
{
three operational areas that are currently being prioritised:
i.
strengthening commercial momentum in Germany;
ii.
accelerating operational transformation in Spain; and
iii.
positioning Vodafone Business to maximise EU recovery
funding
{
opportunities.
Strengthening commercial momentum in Germany
Germany is both the largest connectivity market in Europe and
Vodafone’s biggest market, representing 37% of Group Adjusted
EBITDAaL in FY22. Germany has benefited from a more sustainable
competitive environment compared to many other markets in Europe
and is the only top five European market to have experienced ARPU
growth for both mobile and fixed connectivity since 2017. Alongside the
scale and sustainable market structure, Germany also presents the most
significant converged connectivity opportunity of our larger markets,
with
{
only 20.4% of our mobile customers taking a fixed connectivity
product, compared with 53.5% in Spain. Similarly, only 16.3% of our fixed
connectivity customers in Germany take a mobile connectivity product,
compared with 90.7% in Spain.
We are focused on taking advantage of this significant opportunity
through the structural advantage we have created with our fixed
connectivity services. Following the acquisition and commercial
integration of the former Unitymedia assets, we can now reach over
23.7
{
million homes in Germany with 1 gigabit per second fixed line
connectivity. Beyond this, we have clear upgrade plans for our hybrid
network that include a mix of demand-driven node-splitting – bringing
fibre closer to our customers – and options for upgrading the last stretch
of cable into customers’ homes.
However, our short-term commercial performance in Germany in
the
{
second half of FY22 has not been satisfactory. In the fourth quarter
of
{
FY22 we lost 105,000 net mobile connectivity contract customers
and
{
125,000 net fixed connectivity customers. There were a number of
contributing factors to this performance including the ongoing impact
of
{
lower retail footfall and specific short-term operational matters related
to
{
new customer journeys that were implemented in December 2021, to
ensure compliance with new legislation in Germany. A series of initiatives
is already underway to improve our commercial performance including:
–
We are implementing necessary changes and enhancements to our
customer journeys;
–
We are accelerating the shift from our more traditional retail store
model to
n
digital first’ sales and customer care channels;
–
We are investing in our existing network infrastructure;
–
We have started discussions with potential joint venture partners to
enable further investment in our fixed network infrastructure, including
full fibre-to-the-premises where there is demand from our housing
association customers, and nearby locations that are not currently
covered by our network; and
–
We have strengthened the Vodafone Germany management team
with the addition of a Chief Strategy and Transformation Officer (CSTO)
already in place, and a new CEO joining in July 2022.
We plan a further update of our progress and plans to be provided by
the
{
new Vodafone Germany CEO, Philippe Rogge, in November 2022,
alongside our H1 FY23 results.
Accelerate operational transformation in Spain
Over the last four years, the competitive environment in Spain has
intensified as the number of customer-facing brands has increased from
around 60 in 2017 to almost 80 in 2022. This has resulted in significant
price deflation, with mobile contract ARPU across the market declining
by
{
18% since 2017. Given the relatively high operating leverage within
the sector, this price deflation has had a significant impact on our financial
performance in Spain.
Following a series of measures conducted between FY19 and
FY22
{
we
{
have stabilised our financial performance and are working
to
{
further
{
improve return on capital employed. We have recently
concluded
{
a restructuring plan, mainly affecting owned retail stores as
a
{
part of our operational transformation and announced a reorganisation
of the local executive committee, with new operational units focused on
competitiveness and digitalisation in the consumer segment.
Given the market backdrop, we have also conducted extensive interaction
with policymakers and regulators at both the national and European level.
We are pleased that a series of spectrum and taxation reforms are being
pursued, including a well-structured spectrum auction, with an outcome
below European benchmark levels and longer duration for new licences
with an extension of 20 years after the initial 20-year term.
In addition to these improvements, we are also actively pursuing further
opportunities, including enhancing strategic network partnerships. We
are
{
also working to maximise the opportunities available for Vodafone
Business from EU recovery funding programmes, which will be particularly
significant in Spain.
Position Vodafone Business to maximise EU recovery
funding
b
opportunities
The European Commission has launched a series of funding programmes
with €723.8 billion available under the banner
n
NextGenerationEU’. These
include the Recovery and Resilience facility, which combines €385.8 billion
of loans and €338 billion of grants available to European Union Member
States. Of these grants, approximately 70%
are being allocated to Euro
pean
Union Member States in which Vodafone has an operating presence.
These grants are planned to be 70% committed by the end of 2022.
The
{
range of funding presents a direct and indirect opportunity given
that
{
at least 20% of the total funding is planned to support the European
Commission’s digital transformation agenda. We are tracking the progress
of funding applications and approvals at the project level.
Scan or click to watch our Chief Executive giving
a
b
more detailed review of our strategic progress
within
b
an
b
accompanying video presentation:
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18
Vodafone Group Plc
Annual Report 2022
Well placed to manage challenging
macroeconomic conditions
The macroeconomic climate presents specific challenges for our sector
to navigate and we are organised to effectively balance our regional
scale
{
and local agility. We are prioritising a series of actions to mitigate
the
{
current macroeconomic challenges.
Macroeconomic challenges for our sector
Whilst Vodafone and the broader telecommunications sector are well
positioned to deliver relatively resilient financial performance during
periods of macroeconomic uncertainty, there are specific challenges
to
{
be managed. Firstly, rising energy costs will have an impact on our
financial performance in the year ahead. In FY22, our total electricity
usage was 5.9 TWh, with a total cost of €846 million.
Energy price increases are feeding through into a broader inflationary
environment, with the European Central Bank forecasting the Harmonised
Index of Consumer Prices to be in the range of 1.9% to 5.1% during
2022-2024. These inflationary pressures are beginning to impact
customer confidence, both consumers and businesses.
Our sector and many others have experienced increased volatility in
supply chains and an increase in logistics costs. Also, across Europe
many
{
organisations have experienced an increase in the both the
volume
{
and sophistication of cyber-attacks. This is leading to an
increase
{
in the expectations of governments to ensure organisations’
cyber defences are secure and resilient.
Balancing regional scale and local agility
We believe that we are well-positioned within the sector to navigate
the
{
current macroeconomic environment. We are organised to ensure
the optimal balance between ensuring local agility, whilst delivering
significant benefits of scale through standardisation at a regional level.
In-market autonomy ensures local agility
Our local in-country teams are best placed to understand the needs
of
{
their local market and make appropriate decisions, with end-to-end
accountability. Our in-country leadership teams have full control over
their P&L and capital allocation, as well as ensuring they have the optimal
local team structures.
This end-to-end accountability is matched by full autonomy over product,
pricing and marketing decisions for their market. This ensures each country
operation can remain agile in highly dynamic and competitive markets. O
ur
local markets also benefit from sharing best practice and, when decided
locally, adopting best practices developed in other markets. For example,
Vodafone UK developed investment-linked pricing structures, which
have
{
now been implemented in four other European markets. Similarly,
Vodafone Spain developed a second brand,
n
Lowi’, to compete more
effectively in the value segment. This approach has now been adopted
in
{
a localised manner in the majority of our other European markets.
Each local country operation also has full control over its channel and
customer journeys. Again, each market often chooses to benefit from
best practices developed in other markets. For example, the MyVodafone
app, which has chosen to be taken and adopted by 12 markets and is
enjoyed by 52 million customers.
Regional standardisation delivers scale benefits
To ensure our country operations receive the full benefits of being part of
a larger Group, we are structured to deliver efficient operational support
through regionally scaled services. The connectivity value chain has a
high degree of replicable and repeatable services across each of our
markets. This is essential to compete against the local incumbent
operators who benefit from historically derived local scale.
We continue to simplify our approach to networks and technology
through integrating our European network, IT and digital teams. The
aim
{
was to drive efficiency, increase speed of execution, standardise
key
{
processes, and codify the best solutions for implementation across
all
{
of our markets. Through standardisation of what equipment and
software we
{
use, we can then in turn standardise how our networks are
constructed and operated. This standardisation delivers both cost and
capital efficiencies, together with enhancements in network quality. For
example, we reported a 42% year-on-year reduction in incidents across
our networks and a significant step-up in network testing results.
Secondly, through combining the purchasing power of our business
across Europe and Africa we improve both the efficiency and resilience
of
{
our supply chains. We have consolidated our supplier management
function into a single procurement company. The Vodafone Procurement
Company manages global tenders and allows us to generate over
€600
{
million in annual savings compared to standalone operators. For
example, following the acquisition of the Liberty assets in Germany and
Central and Eastern Europe, we have delivered a double-digit percentage
saving. The efficiency of our procurement is further demonstrated by
independent operators paying to access our pooled procurement,
alongside other services, through our
n
Partner Markets’ business.
Thirdly, we manage our IT operations, network operating centres and
back-office activities through four Shared Service Centres (
nB
VOIS’)
in
{
India, Egypt and Eastern Europe. Over a third of the cumulative
€1.5
{
billion net opex savings made between FY19 and FY22 in Europe
and Common Functions were generated through integrating activities
into _VOIS and driving digitisation at speed. Approximately 30% of the
Group’s team members work in _VOIS and other shared operations,
and
{
over the last four years, we have delivered 8,200 role efficiencies.
Actions underway to mitigate macroeconomic challenges
Through further optimisation of the balance between in-market agility
and efficient regional standardisation we have a number of initiatives
underway to effectively manage the macroeconomic challenges in our
sector. Key areas of focus are improving our commercial agility at a local
level and further enhancing our operational efficiency at a regional level.
Initiatives to improve our commercial agility include expansion of our
investment-linked pricing programme and expansion of our flexible
contract pricing structures, which enable consumers to
n
flex’ the
length
{
of
{
contracts and monthly payments. We are also extending the
attractiveness of converged connectivity products, which increase the
loyalty rates of our consumer customers.
Initiatives underway to further enhance our operational efficiency
include
{
expanding the use of power purchase agreements to lock-in
electricity supply and pricing over longer periods and remaining agile
in
{
the re-deployment of tasks to regional centres of excellence, in lower
cost
{
locations.
Strategic review (continued)
19
Vodafone Group Plc
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Strategic report
Governance
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Other information
Committed to improving shareholder returns
Following the launch of the second phase of our strategy to be the
new
{
generation connectivity and digital services provider for Europe and
Africa, we conducted an extensive portfolio review to assess the optimal
structure to execute our strategy and create value for our shareholders.
Historically, our Group has been managed as a combination of
geographically focused operating companies, which draw from a range
of
{
shared services. Over the last three years, we have been evolving
our
{
business model and organisational structures to operate in a
more
{
streamlined and agile matrix, recognising the importance of local,
in-market scale and capabilities, as well as generating further value from
the scale and breadth of our footprint.
We manage our Group through four group-wide operational layers:
A.
infrastructure assets;
B.
shared operations;
C.
growth platforms; and
D.
retail and customer service.
Infrastructure assets
Our converged connectivity infrastructure is largely managed through
three components: passive mobile, active mobile and fixed.
Our passive mobile infrastructure is now primarily held and operated
through Vantage Towers’ network of around 83,000 towers across
10
{
European markets. The Vantage Towers IPO was completed
successfully in March 2021 and the company has a current market
capitalisation of €16 billion. We continue to own and operate our active
mobile infrastructure in Europe directly, which includes 117,000 radios.
In
{
addition, our African operations operate a further 42,000 radios and
22,000 towers. We reached network sharing partnerships in 10 markets
between FY19 and FY22 and are committed to enhancing asset utilisation
through further network sharing. By separating and listing Vantage Towers
at pace, it is now in a prime position to drive further consolidation within
the European sector, which in turn will provide Vantage Towers further
strategic flexibility. We are actively pursuing accretive bolt-on transactions
and industrial merger opportunities, which could lead to the deconsolidation
of Vantage Towers from the Group and monetisation of our holding
over
{
time.
Our fixed connectivity infrastructure comprises consumer connectivity
networks, mobile backhaul, and international terrestrial and submarine
connections. Across the Group, our fixed connectivity networks include
1.6 million kilometres of fibre and coaxial cable infrastructure. Our
approach to operating our connectivity infrastructure was discussed at a
recent investor briefing, in which we outlined our unified pan-European
technology organisational structure. We are actively exploring further
opportunities for our fixed network assets to improve asset utilisation,
including a joint venture in Germany to support investment in full
fibre-to-the-premises where there is demand from our housing
association customers and expand the reach of our network.
The leading FinTech in Africa
Since formation in 2007 as a money transfer service, Vodafone’s
financial
{
services businesses in Africa – encompassing Vodacom Group,
Safaricom and Vodafone Egypt – have collectively grown to be the
leading FinTech in Africa. Including Safaricom, the Vodacom Group has
52.4 million customers, transacting €24.8 billion per month. In FY22 we
generated €336 million service revenue from M-Pesa and other financial
services, excluding Safaricom. Our African FinTech business has significant
growth opportunities through penetration growth in existing markets,
expanding into new markets and scaling new products, including the
recent launch of the VodaPay
n
super-app’ in South Africa. The Vodacom
Group has clear
{
financial ambitions to grow its new services, which include
financial services, at or above 20% CAGR. We have completed the legal
separation of our FinTech business at a local country level, which enables
us to accelerate the pace of growth, supporting a pathway of monetisation
over time.
The global IoT connectivity leader
Vodafone’s IoT service was established in 2008 and has grown to
be
{
the
{
largest IoT connectivity provider globally, with 150 million
devices
{
connected. Vodafone IoT has been recognised as a leader in
managed connectivity by Gartner every year since 2014. Vodafone IoT
currently generates €0.9 billion annual revenue with double-digit revenue
growth and a strong double-digit ROCE. The total addressable market is
€10
{
billion and expected to grow 16% p.a., with further stimulus from the
NextGenerationEU recovery plan funding, supporting Vodafone’s further
expansion into end-to-end IoT services.
We are currently in the process
of
{
enabling a separation of Vodafone IoT, as greater independence from
Vodafone will help to accelerate the platform’s growth and attractiveness
to both new customers and connectivity partners.
Shared operations
As discussed on earlier, the connectivity value chain involves a
high
{
degree of repeatable processes across all our markets, such as
procurement, network deployment, network operations, sales activities,
customer support operations, and billing and transaction processing.
As
{
one of the largest global connectivity providers, we have a significant
opportunity to standardise processes across markets, relocate operations
to lower cost centres of excellence and apply automation at scale,
delivering best-in-class efficiency levels. Our shared operations are
delivering over €400 million of operating cost savings per annum.
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In addition to the regional standardisation of networks, procurement and
shared services, our Vodafone Roaming Services operation manages our
global roaming relationships with other operators, our Vodafone Carrier
Services business provides wholesale connectivity services, and our
Partner Market’s team works with 30 local operators in building strategic
alliances and extending our reach into different markets. These functions
generate over €250 million revenue and cost savings annually.
We have made good progress over the last four years, however there
is
{
still scope for further efficiencies, particularly with respect to network
operations and digital services platforms.
Growth platforms
Over the last few years, we have invested in digital capabilities and
scalable technology to build three digital growth platforms, which were
discussed at a recent investor briefing.
Leading digital consumer services
Complementary digital services play a crucial role in deepening
relationships with consumers, in addition to having attractive economic
models. We now have over 50 million customers subscribing to a digital
service, which leads to higher ARPU, improved distribution efficiency,
higher NPS and lower churn. We are focused on further developing our
strong positions in consumer IoT, Vodafone TV, home services, device
lifecycle services and loyalty applications.
Scan or click to watch our case study
on digital consumer services:
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20
Vodafone Group Plc
Annual Report 2022
Strategic review (continued)
To summarise, we have three priority areas to optimise
our business structure during FY23, with a further three
value-creating structural enhancements underway.
FY23 portfolio priorities:
–
We are pursuing options for Vantage Towers that will enable it to increase
its pan-European industrial scale, whilst also realising value for Vodafone’s
shareholders and enabling deconsolidation from Vodafone, to further
simplify the Group’s structure;
–
We are in the final steps of completing the transfer of Vodafone’s
holding in Vodafone Egypt to Vodacom, which creates value for
Vodafone shareholders, enhances the diversification and growth
profile
{
of Vodacom and further simplifies the Group’s structure; and
–
We continue to pursue pragmatic in-market mobile consolidation
opportunities in Europe that will strengthen our market position and
create value for our shareholders.
Additional value-creating structural enhancements
–
We have started discussions with potential joint venture partners to
enable further investment in our fixed network infrastructure, including
full fibre-to-the-premises where there is demand from our housing
association customers, and nearby locations that are not currently
covered by our network;
–
We are currently in the process of enabling a separation of Vodafone
IoT, which will enable greater independence from Vodafone to
accelerate its growth and attractiveness to both new customers
and
{
connectivity partners; and
–
We have completed the legal separation of our FinTech business at a
local country level, which enables us to accelerate the pace of growth,
supporting a pathway towards monetisation over time.
Successful execution of these portfolio actions will further simplify
Vodafone’s operations, enhance the visibility of value to equity markets
and most importantly, ensure we are organised in the optimal structure
to
{
deliver our long-term organic growth strategy as a next-generation
connectivity and digital services provider in Europe and Africa.
Outlook for FY23
Our performance during FY22 has been in line with our expectations and
demonstrates the relative resilience of our operating model. We remain
focused on the delivery of the next phase of our strategy.
The current macroeconomic climate presents specific challenges, and
is
{
likely to have an impact on our financial performance in the year ahead.
Whilst
our business model is relatively more resilient than many others, there are
specific challenges to be managed. The war in Ukraine and
{
energy price
increases are contributing to a broader inflationary environment, and these
inflationary pressures are beginning to impact customer confidence. O
ur
sector and many others have also experienced increased volatility in
supply chains and an increase in logistics costs. We have a number of
initiatives underway to mitigate these macroeconomic challenges.
Based on this assessment of the global macroeconomic outlook:
–
Adjusted EBITDAaL
1
is expected to be between €15.0 - €15.5 billion
in
{
FY23; and
–
Adjusted free cash flow
1
is expected to be c.€5.3 billion in FY23.
Africa Consumer
In Africa, we are the leading provider of mobile data and mobile payment
services. We have 185 million mobile customers in eight markets and we
are the leading mobile connectivity provider by revenue market share in
seven markets.
On 10 November 2021, we announced that we have agreed to
transfer
{
our 55% shareholding in Vodafone Egypt to Vodacom Group,
our
{
African subsidiary, for €2,722 million on a debt free, cash free basis.
The integration of Vodafone Egypt into Vodacom follows a series of other
portfolio simplification transactions which have helped Vodacom become
a pan-African connectivity and financial services powerhouse. Including
Egypt, Vodacom will have number 1 market positions in seven countries
with combined populations over more than 500 million people. We will
move at pace with the imminent integration of Vodafone Egypt, which will
benefit from closer cooperation with Vodacom, enabling it to accelerate
growth in financial services and IoT.
Click or scan to watch our digital services
and experiences investor brie
ȣ
ng:
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investor brie
ȣ
ng:
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ż
ng
Vodafone Business
Vodafone Business is a key growth driver for the Group, representing
27%
{
of service revenue in the period. We operate in attractive markets
with a compelling structural opportunity, with expected addressable
market growth of c.8% per annum. Our strategy is grounded in our
purpose to connect for a better future and is focused on three core
elements. Firstly, to be the trusted partner for small and medium-sized
enterprises. Secondly, to be the gigabit connectivity provider of choice
to
{
large enterprises. Thirdly, to be the leading end-to-end provider of IoT
solutions
{
for every organisation.
Click or scan to watch our digital services
and
b
experiences
b
investor brie
ȣ
ng:
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Retail and customer service
Europe Consumer
In Europe, we are a leading converged connectivity provider with
almost
{
9
{
million converged customers, 114 million mobile connections,
145
{
million marketable NGN broadband homes, and we have launched
5G in 294 cities in 11 markets in Europe.
Over the last decade, the performance of the European telecommunications
industry has been weaker than other regions, which market commentators
largely attribute to its regulatory environment. European regulation
has
{
been driving increasingly fragmented market structures, compared
with North America or Asia. Sustained price deflation and the inability
to
{
derive
{
cost synergies from scale have impacted sector returns, which
in
{
turn limits the sustainability of capital investment in critical national
infrastructure. As noted above, Germany has benefited from a more
sustainable competitive environment compared to many other
markets
{
in Europe and those markets would benefit from further
in-market consolidation. We are pragmatically pursuing value accretive
in-market consolidation to deliver sustainable market structures in our
major European markets.
Note:
1.
These line items are alternative performance measures which are non-GAAP measures.
See
{
’Non-GAAP measures’ on page 223 for more information.
21
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
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Other information
We are transforming to become a new generation
connectivity and digital services provider for Europe
and Africa. Our people strategy accelerates this
transformation, by seeking to create an inclusive
environment for growth, where everyone has the
opportunity to thrive.
The Spirit of Vodafone
Our culture – the ‘Spirit of Vodafone’ – outlines the beliefs we stand for
and the behaviours that enable our strategy and purpose.
This year we have continued embedding Spirit throughout the
organisation, focusing on transforming our culture through addressing
habits, leadership, systems and processes. In May 2020, we introduced
a
{
bi-annual employee survey called ‘Spirit Beat’ to measure culture
and
{
its
{
impact. The results demonstrate how Spirit behaviours are being
embedded in the employee experience and confirm the positive impact
of these behaviours in driving performance.
Spirit Beat surveys
Behaviour
Sept 2021
Jan 2021
Earn customer loyalty
74
72
Experiment, learn fast
78
77
Create the future
75
75
Get it done, together
77
76
Overall Spirit index
1
76
75
Response rate
80%
86%
Note:
1.
The overall Spirit index reflects the average of the four Spirit behaviour scores.
Following each survey, employees receive personalised and artificial
intelligence-driven ‘nudges’ based on their confidential responses over
a
{
20-week period. These nudges support behaviour change, consolidate
new habits, and create a continuous feedback loop, with over two million
nudges deployed since May 2020. Based on responses from the latest
survey, 68% of colleagues found nudges useful, and analysis has shown
that teams with managers who embraced Spirit and took action had
a
{
higher Spirit Index (+8) and engagement score (+9) compared to
managers who did not.
Improvements in team Spirit index results are also associated
with
{
better
{
business outcomes in customer operations centres.
For
{
example, we have identified a positive relationship with First Call
Resolution (‘FCR’) and Transactional Net Promoter Score (‘tNPS’) metrics.
Each point increase in the Spirit Index consistently predicts an increase
in
{
both FCR
{
and tNPS.
In addition to Spirit Beat, we ran three pulse surveys to listen to
employee
{
feedback during the pandemic across the year. We
continued
{
to observe high scores with employees feeling connected
to
{
their team (80 in April 2021, 81 in both July and November 2021)
and
{
expressing positivity about the future in how we work at Vodafone
(79
{
in
{
April 2021, July and November 2021). We have also seen an
increase in
{
how employees are feeling (72 in April, 75 in both July
and
{
November 2021). The results have informed our response to
COVID-19 and the formation of new ways of working post-pandemic.
They
{
also demonstrated employees’ pride in Vodafone’s response to the
pandemic and praise for the hybrid working policy. We
{
will continue to
listen to our employees through Spirit Beat and pulse surveys to inform
how we design and improve the employee experience.
Leadership at Vodafone
Senior leadership are accountable for our culture transformation.
The
{
Board reviews progress on employee engagement and Spirit on a
regular basis, and the Executive Committee monitors key achievements
in
{
embedding Spirit and considers further opportunities to drive growth
and transformation.
Leadership is essential for driving transformation, and we have invested in
developing inclusive leaders who drive growth and innovation, act as role
models, coach and empower teams, and lead with Spirit. In October 2021,
we launched the Vodafone Leadership Standards to create a consistent
understanding of what it takes to successfully lead with Spirit.
The Vodafone Leadership Standards are being embedded throughout
the
{
leadership development journey and the new ‘Spirit Accelerator’
programme. From April 2022, over 300 senior leaders will experience
‘Spirit Accelerator 2.0’, which will focus on enhancing their leadership
capability to drive growth and transformation, deliver operational
excellence, amplify customer experience and loyalty, and continue to
create a culture of inclusion. Our newly introduced 360 feedback tool
will
{
further support our leaders’ development.
We continue to embed Spirit in Company policies, employee journeys
and
{
organisational rituals. We are supporting managers to demonstrate
Spirit as they transition with their teams into hybrid working and are
using
{
updated leadership assessment methodologies to reflect Spirit
behaviours. We introduced quarterly ‘Spirit of Vodafone Days’ to provide
dedicated space for personal growth, wellbeing, and connection across
all
{
markets and we run a global recognition programme that celebrates
those who demonstrate Spirit behaviours. We also continue to develop
‘LaunchPad’, our global employee-led innovation platform which helps
‘Create the Future’. In the two years since it has been operational, our
employees have submitted over 2,000 ideas, ranging from e-waste
recycling, Internet of Things (‘IoT’) marketplaces to cloud smartphones.
We are seeing the value from ideas that have come through the process,
for example ‘Scam Signal’ is a Vodafone application that helps businesses
combat fraud and cyber crime while improving customer experience by
utilising our network to identify bank transfer scams in real time.
Agile and efficient operating model
Our Group operating model is designed to maximise the effectiveness
of
{
the local market operations by enabling them to benefit from the
Group’s scale across Europe and Africa, whilst at the same time being
able
{
to respond quickly and effectively to market conditions and
customer needs.
Read more about how we balance regional scale
and
b
local
b
agility on pages 11 and 18
Read more about our headcount
on page 38
Our people strategy
Our people strategy
Strategic report
Governance
Financials
Other information
22
Vodafone Group Plc
Annual Report 2022
Our people strategy (continued)
Diverse talent and future ready skills
As we evolve our operating model and execute our strategy, we are
focused on developing diverse talent for the future and building future
skills by accelerating reskilling and upskilling at scale.
During the year, we reviewed our talent and succession pools across
senior roles. These are ultimately discussed and approved at the annual
Executive Committee talent review and are also shared with the Board.
Gender diversity of the executive succession pools increased to 38%
from
{
31% in the prior year. We have also adopted a consistent set
of
{
assessment tools to support the selection and development of
senior
{
leaders.
Read more about workplace equality
on pages 38 to 40
Our transformation into a new generation connectivity and digital services
provider requires new skills and capabilities in the organisation, such as
software engineering, automation and data analysis. In October 2021,
we
{
announced our ambition to hire 7,000 software engineers by
2025,
{
through a combination of recruitment, reskilling and insourcing.
In
{
support, we launched a global recruiting playbook, invested in
recruitment campaigns across nine markets and redesigned the global
careers site. In June 2021, we also introduced a ‘Technical Career Path’
to
{
allow engineering experts to grow and develop their careers by
leveraging their deep expertise.
Local markets are also focused on developing key strategic skills
to
{
execute our strategy. For example, in FY19 the Vodacom Group
introduced the ‘#1MoreSkill’ digital development initiative that allows
employees to develop new critical skills in agile, software engineering,
cyber security and IoT. In FY22, 21% of Vodacom South Africa
employees
{
completed training in one of these skills and 55% of
employees redeployed to new roles in Vodacom had been reskilled
or
{
upskilled through this initiative. In FY21, Italy launched a skills
transformation pilot, involving 10 functions and covering more than
4,600
{
employees. To date 1,350 have been upskilled and 1,329 reskilled.
Of those reskilled, 271 have been redeployed to new roles. As a further
example, Turkey has launched seven reskilling initiatives whereby
employees receive training in emerging skills such as cyber security,
DevOps, data
{
science and customer experience. By the end of FY22,
29%
{
of
{
participating employees had been redeployed to new roles.
We continue to support the personal and professional growth of people
through online learning initiatives. During the year, 85% of employees
completed non-mandatory training, with an average of 1.25 hours
per
{
month. We invested an average of €542 for both mandatory and
non-mandatory training for each employee to build future capabilities
and issued 96,550 LinkedIn Learning and 14,000 O’Reilly licences.
Spirit
{
of
{
Vodafone Days also had a positive impact with a 287% increase
in
{
formal online learning with over 24,000 hours of learning taking place
on those two days alone.
To execute the strategy and bring purpose to life, we continued to
invest
{
in youth hiring (6,430 hires, of which 771 graduates) whilst
providing digital learning experiences to 95,664 young people, through
local work experience programmes and initiatives. During the year, we
also hired 346
{
apprentices with local programmes that aim to grow future
talent and skills in areas such as cyber security, network engineering and
software engineering through work-based learning and qualifications.
To accelerate skills transformation and create a learning culture, we are
introducing a new operating model for learning, talent, leadership, and
skills – the global Vodafone Learning Organisation (‘VLO’). The VLO will
deliver a higher-quality, consistent and more impactful development
experience for all of our employees. It will also help us to be recognised
as
{
a workplace where growing never stops and learning is a fundamental
part of every individual’s experience at Vodafone.
In March 2022, we launched a campaign offering fast-track employment
and relocation support for Ukrainians and other nationals seeking work
outside of their home country due to the war or other humanitarian
crisis.
{
We received over 1,000 applications by the end of April 2022 and
hired new employees in Luxembourg, the UK, Romania and Germany at
specialist, manager and senior manager levels in areas such as networking
engineering, logistics, financial analytics and quality assurance testing.
Digital and personalised experience
Future ready ways of working
Based on knowledge gained through the pandemic and external
research,
{
in March 2021 we launched Future Ready Vodafone, a
global
{
policy providing flexibility on how and where employees work.
The
{
new policy sets global standards for hybrid working including an
expected average of two to three days a week working from the office
(depending on the role) and the support for home office equipment. In
September 2021, the option to work from another country during the
year for a maximum of 20 days was added to the same policy. We will
continue to keep our flexible working policies under review as we learn
from our experience in this area.
Hubs for talent and innovation
Where appropriate, the remote hiring policy allows teams to source skills
across our footprint. This year, a new centralised European Research and
Development (‘R&D’) centre opened in Malaga, Spain. A second centre
will
{
open in Dresden, Germany, later this year. These hubs specialise in
developing new technology solutions and digital services such as unified
communications and Internet of Things (‘IoT’) and will create more than
600 highly skilled jobs.
Office space
The shift to hybrid working has redefined the role of the office and
inspired us to create a new global office design primarily for collaboration
and connection. We experimented in Spain, South Africa and the UK, and
based on pilot feedback, offices in the Czech Republic, Luxembourg and
_VOIS Hungary have been redesigned.
Last year, a new booking system for desks and collaboration spaces was
implemented to help transition to the new ways of working and gather
information about employees’ behaviours in the hybrid model. A new
initiative called ‘Office in a Box’ was implemented to support employees’
wellbeing while working from home, providing an adequate virtual office
setup at home following a self-assessment.
Mental health and wellbeing
We remain focused on physical and mental wellbeing, with a variety of
training and services available in each market. Provision of employee
assistance programmes and psychological support services continued
to
{
grow. Many markets now have mental health first aiders, wellbeing
ambassadors, mental health champions or the local equivalent; in the UK
we have around 250, alongside 700 managers who are trained in mental
health awareness.
We also launched a standardised mental health toolkit across all
markets.
{
The toolkit provides a better understanding of mental health
and
{
support to anyone going through challenges or those helping a
colleague, family member or friend. In June 2021, for Men’s Health Week
we ran a dedicated session on Men’s Mental Health. In October, for World
Mental Health Day we ran a series of global sessions ranging from dance
sessions, leaders’ mental health training and supporting young people
through grief and loss. In February 2022, the annual Global Wellbeing
Week sessions were attended by over 6,000 employees and our Senior
Leadership Team, covering mental health and cancer awareness.
Click to read more about mental health and wellbeing:
vodafone.com/wellbeing
23
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Employee forums
We have a number of employee forums where elected employee
representatives represent the views of their colleagues. During the
year,
{
the European employee forum met twice, and the South African
employee forum met four times. The Board’s Workforce Engagement
Lead, Valerie Gooding, attended one of each forum during the year to
gather employee views, with the key discussion topics from the meetings
including Future Ready ways of working, our response to COVID-19 and
progress on our Fair Pay agenda.
Read more about the Board’s engagement with the
employee voice on page 91
Pay and benefits
As part of the people experience, we continue to ensure pay, benefits,
and
{
wellbeing propositions are competitive and fair. Pay is typically
reviewed on an annual basis, with increases aligned to an individual’s
level
{
of skills and experience as well as external factors like market
competition and
{
inflation. Our total reward approach also encourages
collective performance and ‘in the moment’ recognition. For example
21,117 peer to peer ‘Thank You’s’ and 60,196 cash Star awards were
issued through a recognition tool during the year.
We continue to apply Fair Pay principles across all markets, working with
the Fair Wage Network to ensure a good standard of living in each market.
In the UK, our commitment to these principles is reflected in how the
Living Wage Foundation has recently certified us as an Accredited Living
Wage employer.
Read more about our Fair Pay principles
on page 106
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
Digital experience
Our people experience is informed by employee insights and guided by
our culture. This year we worked on providing a more digital employee
experience by establishing ‘Grow with Vodafone’, an integrated talent
acquisition, skills and learning platform. This significantly enhances
the
{
recruiting and learning experience, whilst giving employees greater
ownership of their individual learning and career development. The
platform provides three main features:
–
Grow your Skills:
Enables individuals to build a unique skills profile
enabling personalised learning and career recommendations, as well
as
{
supporting upskilling opportunities.
–
Grow your Learning:
Smart technology drives personalised learning
recommendations to help each employee achieve their career goals
whilst also driving a culture where growing never stops.
–
Grow your Career:
Provides role recommendations based
on
{
skills
{
and experience to candidates. It also offers optimised
recruiter
{
and hiring manager experience by prioritising the most
suitable applications.
By the end of March 2022, over 13,000 unique users had accessed all
features of the platform and approximately 24,000 employees accessed
learning content.
A new digital onboarding tool was also deployed in a number of our
markets and shared service centres and global deployment will be
complete by October 2022. So far the tool has received an encouraging
Net Promoter Score (‘NPS’) of 85.1 from employees who experienced the
new process.
Next year a global workforce planning system will be launched, delivering
data driven workforce plans and insights. It will allow better identification
of future workforce requirements using business drivers and modelling
through scenario planning. The system will impact how we approach
resourcing, talent management and learning strategies, empowering us
to
{
plan effectively. Pilots will launch in early 2022 before being expanded
later in the year.
In FY23, we will also deploy new people analytics capabilities, supported
by Google Cloud platform across some of our markets.
Workers’ councils and union engagement
We respect freedom of association and recognise the rights of employees
to join trade unions and engage in collective bargaining in accordance
with local law. We continue to maintain strong relationships with the
workers’ councils and unions and we have approximately 22,250 people
covered by collective bargaining agreements across our global footprint.
This year, we reached several agreements with the unions as we
continued to shape the future of work. In Spain, all employees can work
up to 60% remotely. In Italy, 60% to 80% of employees will work remotely
post-pandemic (depending on role) and both markets have guaranteed
rights to disconnect outside working hours. In June 2021, Italy also
committed to reskilling call centre employees, with government support.
Strategic report
Governance
Financials
Other information
24
Vodafone Group Plc
Annual Report 2022
–
Group revenue increased by 4.0% to
Ȑ
45.6 billion mainly driven by service revenue growth in Europe and
b
Africa.
–
Adjusted EBITDAaL growth of 5.0%

to
Ȑ
15.2 billion and margin expansion of 0.5

percentage points
year-on-year to 33.4%.
–
Ongoing delivery of our efficiency programme leading to a net
Ȑ
1.5 billion of savings during FY19-22
–
Operating profit increased by 11.1% to
Ȑ
5.7 billion, reflecting the growth in Adjusted EBITDAaL and
reduction
b
in
b
depreciation and amortisation on owned assets.
–
Significant increase in profit for the financial year and basic earnings per share, due to higher Adjusted EBITDAaL,
and lower income tax
b
expense.
–
Returns continued to improve and pre-tax ROCE increased by 1.7 percentage points to 7.2%.
Continued growth in both Europe and Africa
Our financial performance
Scan or click to watch our Chief Financial Of
ȣ
cer, Margherita Della Valle, summarise our
ȣ
nancial performance in FY22:
investors.vodafone.com/videos
Group financial performance
FY22
1
€m
FY21
€m
Reported
change %
Revenue
45,580
43,809
4.0
–
Service revenue
38,203
37,141
2.9
–
Other revenue
7,377
6,668
Adjusted EBITDAaL
2,3
15,208
14,386
5.7
Restructuring costs
(346)
(356)
Interest on lease liabilities
4
398
374
Loss on disposal of property, plant and equipment and intangible assets
(28)
(30)
Depreciation and amortisation of owned assets
(9,858)
(10,187)
Share of results of equity accounted associates and joint ventures
211
342
Other income
79
568
Operating profit
5,664
5,097
11.1
Investment income
254
330
Financing costs
(1,964)
(1,027)
Profit before taxation
3,954
4,400
Income tax expense
(1,330)
(3,864)
Profit for the financial year
2,624
536
Attributable to:
–
Owners of the parent
2,088
112
–
Non-controlled interests
536
424
Profit for the financial year
2,624
536
Basic earnings per share
7.20c
0.38c
Adjusted basic earnings per share
2
11.03c
8.08c
Notes:
1.
The FY22 results reflect average foreign exchange rates of €1:£0.85, €1:INR 86.59, €1:ZAR 17.25, €1:TRY 12.16 and €1: EGP 18.35.
2.
Adjusted EBITDAaL and Adjusted basic earnings per share are non-GAAP measures. See page 223 for more information.
3.
Includes depreciation on leased assets of €3,908 million (FY21: €3,914 million).
4.
Reversal of interest on lease liabilities included within Adjusted EBITDAaL under the Group’s definition of that metric, for re-presentation in financing costs.
Organic growth
All amounts marked with an ‘*’ in the commentary represent organic growth which presents performance on a comparable basis, excluding the impact of foreign
exchange rates, mergers and acquisitions and other adjustments to improve the comparability of results between periods. When calculating organic growth, the FY21
results for Vantage Towers and relevant operating entities have been adjusted to reflect a full year of operation on a pro forma basis in order to be comparable to FY22.
Organic growth figures are non-GAAP measures.
Segmental reporting
Following the IPO of Vantage Towers A.G. in March 2021, the business is a new reporting segment for the year ended 31 March 2022 (‘FY22’). Comparative information for
the year ended 31 March 2021 has not been re-presented. Total revenue is unaffected because charges from Vantage Towers A.G. to operating companies are eliminated
on consolidation. Adjusted EBITDAaL and Adjusted EBITDAaL margin are both impacted by this change which does affect year-on-year comparisons. The segmental
results of Vantage Towers A.G. include the contribution from Cornerstone Technologies Infrastructure Limited as a joint operation with Telefonica in the UK.
Adjusted EBITDAaL
Adjusted EBITDA is now referred to as Adjusted EBITDAaL for FY22, with no change in the underlying definition. Adjusted EBITDAaL is a non-GAAP measure.
Read more about non-GAAP measures
on page 223
25
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Geographic performance summary
FY22
Germany
€m
Italy
€m
UK
€m
Spain
€m
Other Europe
€m
Vodacom
€m
Other
Markets
€m
Vantage
Towers
€m
Common
Functions
1
€m
Eliminations
€m
Group
€m
Total revenue (€m)
13,128
5,022
6,589
4,180
5,653
5,993
3,830
1,252
1,414
(1,481)
45,580
Service revenue (€m)
11,616
4,379
5,154
3,714
5,001
4,635
3,420
–
522
(238)
38,203
Adjusted EBITDAaL (€m)
5,669
1,699
1,395
957
1,606
2,125
1,335
619
(197)
–
15,208
Adjusted EBITDAaL margin (%
)
43.2%
33.8%
21.2%
22.9%
28.4%
35.5%
34.9%
49.4%
33.4%
Service revenue growth %
Q1
Q2
H1
Q3
Q4
H2
Total
Germany
1.1
0.8
0.9
0.8
0.6
0.7
0.8
Italy
(3.9)
(1.6)
(2.8)
(1.6)
0.1
(0.8)
(1.8)
UK
5.3
4.7
5.0
6.3
8.9
7.6
6.3
Spain
0.5
(2.0)
(0.7)
(1.8)
(4.5)
(3.1)
(2.0)
Other Europe
4.9
2.7
3.8
3.5
0.7
2.1
2.9
Vodacom
18.5
14.6
16.5
11.0
10.6
10.8
13.5
Other Markets
(1.3)
10.0
4.3
7.6
(3.1)
2.1
3.3
Vantage Towers
–––––––
Group
3.1
3.4
3.2
3.1
1.9
2.5
2.9
Organic service revenue growth %*
2
Q1
Q2
H1
Q3
Q4
H2
Total
Germany
1.4
1.0
1.2
1.1
0.8
1.0
1.1
Italy
(3.6)
(1.4)
(2.5)
(1.3)
(0.8)
(1.0)
(1.8)
UK
2.5
0.6
1.2
0.9
2.0
1.4
1.3
Spain
0.8
(1.9)
(0.6)
(1.6)
(5.1)
(3.4)
(2.0)
Other Europe
4.2
2.4
3.3
2.9
2.7
2.8
3.0
Vodacom
7.9
3.1
5.4
4.4
3.1
3.7
4.6
Other Markets
18.4
19.7
19.1
19.8
19.8
19.8
19.4
Vantage Towers
–––––––
Group
3.3
2.4
2.8
2.7
2.0
2.3
2.6
Notes:
1.
Common Functions Adjusted EBITDAaL includes a non-recurring charge in relation to the impairment of prior year receivables.
2.
Adjusted EBITDAaL, Adjusted EBITDAaL margin and organic service revenue growth are non-GAAP measures. See page 223 for more information.
Strategic report
Governance
Financials
Other information
26
Vodafone Group Plc
Annual Report 2022
Our financial performance (continued)
Germany: 30% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
13,128
12,984
1.1
Service revenue
11,616
11,520
0.8
1.1
Other revenue
1,512
1,464
Adjusted EBITDAaL
1
5,669
5,634
0.6
6.5
Adjusted EBITDAaL
margin
43.2%
43.4%
Note:
1.
When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for
Vantage Towers A.G. on a pro
{
forma basis to be comparable to FY22.
Total revenue increased by 1.1% to €13.1 billion, driven by service
revenue and equipment revenue growth.
On an organic basis, service revenue grew by 1.1%* (Q3: 1.1%*, Q4:
0.8%*), driven by broadband ARPU growth, good growth in Business, and
higher roaming and visitor revenue. This was partially offset by a reduction
in mobile termination rates, and lower variable call usage revenue. Retail
service revenue grew by 1.6%* (Q3: 1.7%*, Q4: 1.2%*).
Fixed service revenue grew by 0.5%* (Q3: 0.7%*, Q4: -0.4%*), as
continued
{
broadband ARPU growth was partially offset by lower
variable
{
call usage revenue compared to the prior year, as usage
began
{
to
{
normalise post-pandemic, and a lower TV customer base.
The
{
decline in fixed service revenue in Q4 FY22 was primarily driven
by
{
a
{
lower customer base, partly impacted by specific operational
challenges related to the implementation of policies to comply with a
new telecommunications law, which came into effect in December 2021.
We
{
added 20,000 cable customers during the year, including 66,000
migrations from legacy DSL broadband. Half of our cable broadband
customers now subscribe to speeds of at least 250Mbps, and gigabit
speeds are available to 23.8 million households across our hybrid fibre
cable network.
Our TV customer base declined by 309,000, as reduced retail activity
during the COVID-19 pandemic led to fewer gross customer additions,
and was also impacted by broadband customer losses due to challenges
related to compliance with the new telecommunications law. During the
year, we accelerated convergence penetration as a result of successful
campaigns and our converged customer base increased by 718,000 to
2.4 million Consumer converged accounts. Our converged propositions,
led by the ‘GigaKombi’ products, allow customers to combine their
mobile, landline, broadband and TV subscriptions for one monthly fee.
Mobile service revenue increased by 1.8%* (Q3: 1.7%*, Q4: 2.4%*),
reflecting a higher customer base in both the Consumer and Business
segments, as well as higher roaming and visitor revenue, which more than
offset the impact of a reduction in mobile termination rates. The increased
rate of service revenue growth in Q4 FY22 also benefited from some
small non-recurring year-end adjustments. We added 19,000 contract
customers during the year and contract churn remained broadly stable
year-on-year at 12.3%, despite the impact of operational challenges
related to compliance with the new telecommunications law. In June, we
successfully launched our digital-only second brand, SIMon mobile. We
added a further 6.4 million IoT connections during the year, supported by
strong demand from the automotive sector.
Adjusted EBITDAaL grew by 6.5%*, supported by higher service
revenue,
{
cost synergy delivery, and some one-off settlements. The
Adjusted EBITDAaL margin was 2.1* percentage points higher year-on-
year at 43.2%.
We have now achieved our €425 million cost and capital expenditure
synergy target for the integration of the Unitymedia assets acquisition,
over two years ahead of plan. We see further opportunities for cost
reduction including through the planned termination of our Transitional
Service Agreements (TSAs) with Liberty Global.
We switched off our 3G network on 1 July 2021, with spectrum
re-assigned to increase the capacity, speed and coverage of our
4G
{
networks. Our 5G network is now available to more than 45 million
people. We launched Europe’s first 5G standalone network in April 2021.
Standalone 5G enables higher speeds, enhanced reliability and ultra-low
latency, in addition to using 20% less energy on customers’ devices.
Italy: 11 % of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
5,022
5,014
0.2
Service revenue
4,379
4,458
(1.8)
(1.8)
Other revenue
643
556
Adjusted EBITDAaL
1,699
1,597
6.4
6.4
Adjusted EBITDAaL
margin
33.8%
31.9%
Total revenue was stable at €5.0 billion as lower service revenue was
offset by higher equipment revenue.
On an organic basis, service revenue declined by 1.8%* (Q3: -1.3%*,
Q4:
{
-0.8%*) as good growth in Business digital services revenue, higher
MVNO revenues, and higher roaming and visitor revenue was offset by
continued price pressure, and a reduction in mobile termination rates.
Mobile service revenue declined by 3.2%* (Q3: -2.9%*, Q4: -3.1%*)
reflecting greater competition in the value segment and a lower active
prepaid customer base. This was partly offset by targeted pricing actions
and the positive contribution from PostePay MVNO customer migrations
onto our network, which completed in early August. The decline in
mobile
{
service revenue in Q4 FY22 was impacted by a reduction in
mobile termination rates. Market mobile number portability volumes
continued to improve versus prior year levels. Our second brand ‘ho.’
continued to grow, with 342,000 net additions, supported by our
best-in-class net promoter score, and now has 2.8 million customers.
Fixed service revenue increased by 2.0%* (Q3: 3.1%*, Q4: 5.3%*) driven by
broadband customer base growth in Consumer, as well as good demand
for our Business digital services, such as cloud & security. The acceleration
in fixed service revenue growth in Q4 FY22 was driven by new Business
customer additions, supported by a strong share of EU recovery funding
voucher customers, as well as our pricing actions. We added 73,000
fixed-wireless access customers during the period, which are included
in
{
our mobile customer base. We now have 3.1 million broadband
customers, and 52.6% of our broadband base is converged. Our
total
{
Consumer converged customer base is 1.3 million, an increase
of
{
163,000
{
during the period. Through our own next generation
network
{
and partnership with Open Fiber, our broadband services
are
{
now
{
available to 9.0 million households. We also cover 3 million
households with fixed-wireless access, offering speeds of up to 100Mbps.
Adjusted EBITDAaL increased by 6.4%*, reflecting a 6.6 percentage point
benefit from a €105 million legal settlement, partially offset by lower
service revenue. Excluding the impact of the one-off legal settlement,
Adjusted EBITDAaL was stable* year-on-year. The Adjusted EBITDAaL
margin was 1.9* percentage points higher year-on-year at 33.8%.
27
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
UK: 13% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
6,589
6,151
7.1
Service revenue
5,154
4,848
6.3
1.3
Other revenue
1,435
1,303
Adjusted EBITDAaL
1
1,395
1,367
2.0
3.3
Adjusted EBITDAaL
margin
21.2%
22.2%
Note:
1.
When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for
Vantage Towers A.G. on a pro
{
forma basis to be comparable to FY22.
Total revenue increased by 7.1% to €6.6 billion, due to higher service
revenue and equipment revenue, and an appreciation of the pound
sterling versus the euro.
On an organic basis, service revenue grew by 1.3%* (Q3: 0.9%*, Q4:
2.0%*), driven by strong Consumer segment growth, and supported
by
{
higher MVNO, roaming and visitor revenue. This was partially offset
by
{
a slowdown in Business, and a reduction in mobile termination rates.
Mobile service revenue grew by 2.8%* (Q3: 2.6%*, Q4: 5.9%*) driven
by
{
strong commercial momentum in Consumer, partially offset by the
post-pandemic normalisation of Business connections. The increase in
mobile service revenue growth rate in Q4 FY22 was partially due to higher
wholesale MVNO revenue. During the year, we added 338,000 mobile
contract customers, supported by our ‘Vodafone EVO’ proposition, which
offers customers a combination of flexible contracts, trade-in options,
and
{
early upgrades. We also benefited from good iPhone demand and
improved customer loyalty. Contract churn improved by 0.5 percentage
points year-on-year to 12.5%. Our digital sub-brand ‘VOXI’ also continued
to grow, with 104,000 customers added in the year. Our digital sales
remained strong during the year, and now account for 33% of total
sales.
{
We also announced an exclusive retail partnership with the
Dixons
{
Carphone Group, covering 300 stores and digital channels,
with
{
improved terms compared to our previous arrangement.
Fixed service revenue declined by 2.3%* (Q3: -3.3%*, Q4: -7.0%*),
impacted by lower Business revenue, with a further slowdown in the
segment in Q4 FY22. Our performance was also driven by the decision
to
{
end a large but unprofitable multinational contract, and a reseller
entering into administration in the first half of the year. Our commercial
momentum in Consumer remained strong, with good demand for
our
{
Vodafone ‘Pro Broadband’ product. With 139,000 broadband net
additions during the year, we now have over one million customers,
of
{
which 527,000 are converged. In November 2021, we announced
the
{
expansion of our long-term strategic partnership agreement with
CityFibre. In conjunction with our existing partnership with Openreach,
our
{
NGN broadband services are now available to 29.3 million households.
Adjusted EBITDAaL increased by 3.3%*, driven by growth in service
revenue, and continued strong cost control. Our Adjusted EBITDAaL
margin was 0.3* higher year-on-year at 21.2%.
Spain: 10% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
4,180
4,166
0.3
Service revenue
3,714
3,788
(2.0)
(2.0)
Other revenue
466
378
Adjusted EBITDAaL
1
957
1,044
(8.3)
(1.1)
Adjusted EBITDAaL
margin
22.9%
25.1%
Note:
1.
When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for
Vantage Towers A.G. on a pro
{
forma basis to be comparable to FY22.
Total revenue was stable at €4.2 billion, as higher equipment revenue was
offset by lower service revenue.
On an organic basis, service revenue declined by 2.0%* (Q3: -1.6%*,
Q4
{
-5.1%*) as the impact of continued price competition in the value
segment, and a reduction in mobile termination rates, were partially offset
by higher roaming and visitor revenue. The quarterly slowdown in service
revenue in Q4 was largely driven by a tougher prior year comparative, due
to the full quarter impact of our more-for-more pricing actions in the prior
year, and a reduction in mobile termination rates in FY22.
The market remained highly competitive in the Consumer value
segment.
{
In mobile, our contract customer base remained stable in
the
{
year, supported by strong public sector demand, and a gradual
improvement in our commercial performance towards the end of the
year, reflecting our continued focus on improving customer loyalty.
Mobile contract churn increased by 0.5 percentage points year-on-year
to
{
20.7% due to an exceptionally low churn in the prior year as a result of
portability restrictions. Our second brand ‘Lowi’ added 310,000 customers
during the period and now has a total customer base of 1.5 million.
Our broadband customer base declined by 164,000 as a result of
higher
{
competitive intensity in the Consumer value segment, and the
temporary impact of our retail channel optimisation. Our TV customer
base decreased by 88,000, impacted by continued competitive intensity.
We have renewed our exclusive agreement with HBO Max, and through
our partnerships with other content providers such as Disney, we have
the
{
most extensive library of movies and TV series in the market.
During the year, a digital toolkit platform for small and medium sized
enterprises was launched by the Spanish government as part of the
EU
{
recovery funding initiatives. This scheme enables businesses to
access
{
fully subsidised digital services on a single platform. We have
already received a significant number of registration requests from
customers and will achieve an attractive Adjusted EBITDAaL margin on
this incremental revenue. A second phase of this scheme is expected to
launch in June 2022.
Adjusted EBITDAaL declined by 1.1%* and the Adjusted EBITDAaL margin
was 0.3* percentage points lower year-on-year at 22.9%. The marginal
decrease in Adjusted EBITDAaL reflects lower service revenue, largely
offset by further efficiency savings.
During the year we announced a restructuring plan, mainly affecting
owned retail stores, as part of our operational transformation. In
November, we completed the optimisation of our retail footprint,
with
{
all
{
branded stores now operating under a franchise model.
Strategic report
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28
Vodafone Group Plc
Annual Report 2022
Our financial performance (continued)
In South Africa, service revenue grew year-on-year, supported by
sustained demand, incremental wholesale services, good Business
demand and financial services growth. We added 1.8 million mobile
prepaid customers and 272,000 mobile contract customers, with
the
{
latter supported by our new more-for-more ‘Vodafone Red’
proposition introduced in June. Financial services revenue in South
Africa
{
increased by 12.4%* to €155 million, reflecting the expansion
of
{
our service offerings, and 69.4% of our mobile customer base now
uses
{
data services.
In October 2021, we launched our new ‘VodaPay’ super-app in
South
{
Africa, bringing consumer and business capabilities under
one
{
platform. The application enables customers to access financial,
insurance
{
and eCommerce services and supports businesses with
additional resource planning and ‘business-to-business’ functionalities.
We
{
now have 1.6
{
million registered users on the platform, and over
2.2
{
million downloads of the application.
In March, we announced that Vodacom South Africa had acquired
2x10MHz of 700MHz, 1x80MHz of 2600MHz and 1x10MHz of 3500MHz
spectrum, with a 20-year licence through to 2042. The spectrum will
enable us to significantly expand network capacity and coverage, and
help accelerate post-pandemic economic recovery and digital inclusion.
In Vodacom’s international markets, service revenue increased during
the
{
year. Growth was supported by an increase in M-Pesa transaction
volumes and data revenue. This benefit was partially offset by the
introduction of mobile money levies in Tanzania, and a stronger
prior
{
year
{
comparative in Mozambique and the DRC, reflecting the
reinstatement of fees on person-to-person M-Pesa transfers in the prior
year. M-Pesa transaction value increased by 10.9%, while M-Pesa revenue
as a share of total service revenue increased by 2.0 percentage points to
22.7%, and 65.1% of our customer base is now using data services.
Vodacom’s Adjusted EBITDAaL increased by 3.4%* supported by
{
good
revenue growth, and positive operational leverage in Vodacom’s
international operations. This was partially offset by an increase in
technology operating expenses in South Africa, as we invested in further
improving the resilience of our network. The Adjusted EBITDAaL margin
decreased by 1.0* percentage point and was 35.5%.
On 10 November 2021, Vodacom Group announced it had entered
into
{
an agreement to acquire Vodafone Egypt from Vodafone for a total
consideration of €2.4 billion. The proposed acquisition presents a unique
opportunity to advance Vodacom Group’s strategic connectivity and
financial services ambitions in one of Africa’s premier telecom operators.
Vodafone Egypt is a clear market leader that will diversify and accelerate
Vodacom Group’s growth profile. The transaction is expected to receive
Egyptian regulatory approval in the near term.
Vodacom also announced that it had agreed to acquire a co-controlling
30% interest in the fibre assets currently owned by Community Investment
Ventures Holdings (Pty) Limited (‘CIVH’). CIVH owns Vumatel and Dark
Fibre Africa, which are South Africa’s largest open access fibre operators.
Vodacom’s investment and strategic support will further accelerate the
growth trajectory of fibre roll-out in South Africa helping close the digital
divide. The transaction is subject to regulatory approvals in South Africa.
Other Europe: 13% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
5,653
5,549
1.9
Service revenue
5,001
4,859
2.9
3.0
Other revenue
652
690
Adjusted EBITDAaL
1
1,606
1,760
(8.8)
1.4
Adjusted EBITDAaL
margin
28.4%
31.7%
Note:
1.
When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for
Vantage Towers A.G. on a pro
{
forma basis to be comparable to FY22.
Total revenue increased by 1.9% to €5.7 billion, primarily reflecting service
revenue growth, also supported by the appreciation of local currencies
versus the euro.
On an organic basis, service revenue increased by 3.0%* (Q3: 2.9%*,
Q4:
{
2.7%*), with all markets other than Romania growing during the year.
The
{
growth in service revenue was supported by customer base growth,
higher roaming and visitor revenue, partially offset by a reduction
{
in
mobile termination rates.
In Portugal, service revenue grew due to strong fixed line revenue growth,
higher mobile ARPU, and roaming and visitor revenue growth. During the
period, we added 161,000 mobile contract customers and 64,000 fixed
broadband customers. In October, we announced that Vodafone Portugal
had acquired 90MHz of 3,600MHz and 2x10MHz of 700MHz spectrum,
with a 20-year licence through to 2041. The spectrum will enable us to
significantly expand network capacity to meet growing demand for
reliable, high-quality voice and data services.
In Ireland, service revenue increased, reflecting good mobile contract
customer growth, and higher roaming and visitor revenue, partially
offset
{
by a reduction in mobile termination rates. During the period, our
mobile contract customer base increased by 77,000 and mobile contract
customer loyalty rates improved, with churn reducing 1.5 percentage
points year-on-year to 8.4%.
Service revenue in Greece increased, reflecting higher roaming and visitor
revenue as international tourism grew year-on-year, partially offset by a
reduction in mobile termination rates. During the year, we added 38,000
mobile contract customers and 145,000 prepaid customers.
Adjusted EBITDAaL increased by 1.4%*, supported by good revenue
growth and further efficiency savings, partially offset by a one-off
provision in Greece, and higher direct cost. The Adjusted EBITDAaL
margin
{
decreased by 0.2* percentage points and was 28.4%.
We continued to make good progress on integrating the assets acquired
from Liberty Global in Central and Eastern Europe and we have now
delivered 60% of our cost and capital expenditure synergy target.
Vodacom: 12% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
5,993
5,181
15.7
Service revenue
4,635
4,083
13.5
4.6
Other revenue
1,358
1,098
Adjusted EBITDAaL
2,125
1,873
13.5
3.4
Adjusted EBITDAaL
margin
35.5%
36.2%
Total revenue increased by 15.7% to €6.0 billion and Adjusted EBITDAaL
increased by 13.5%, primarily due to the strengthening of the local
currencies versus the euro.
On an organic basis, Vodacom’s total service revenue grew by 4.6%*
(Q3:
{
4.4%*, Q4 3.1%*) with growth in both South Africa and Vodacom’s
international markets.
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29
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Other Markets: 9% of Group service revenue
FY22
€m
FY21
€m
Reported
change
%
Organic
change*
%
Total revenue
3,830
3,765
1.7
Service revenue
3,420
3,312
3.3
19.4
Other revenue
410
453
Adjusted EBITDAaL
1,335
1,228
8.7
23.0
Adjusted EBITDAaL
margin
34.9%
32.6%
Total revenue increased by 1.7% to €3.8 billion, as higher service revenue
was partially offset by the depreciation of local currencies versus the euro.
On an organic basis, service revenue increased by 19.4%* (Q3: 19.8%*,
Q4: 19.8%*) as a result of higher customer base and ARPU growth across
our markets.
Service revenue in Turkey accelerated as a result of strong mobile
customer base and ARPU growth, with ongoing repricing actions to
reflect
{
increasing inflation in a difficult macroeconomic environment.
Mobile contract customer additions were 1.3 million including migrations
from prepaid customers. We also added 120,000 broadband customers
during the year. Mobile contract churn improved by 3.9 percentage points
year-on-year to 15.4%.
We expect Turkey to be designated as a hyper-inflationary economy
under IFRS during the first quarter of FY23, in which case Vodafone
Turkey’s results will be presented on a revised basis. See note 1 of the
condensed consolidated financial statements for further information.
Service revenue in Egypt grew ahead of inflation, supported by customer
base growth and increased data usage. During the year, we added 237,000
mobile contract customers and 877,000 prepaid mobile customers.
Adjusted EBITDAaL increased by 23.0%* and the Adjusted EBITDAaL
margin increased by 1.1* percentage points, despite the inflationary
pressure on our cost base due to worsening macroeconomic conditions.
The Adjusted EBITDAaL margin was 34.9%.
Vantage Towers: Delivering on our plan
FY22
€m
FY21
1
€m
Reported
change
%
Organic
change*
%
Total revenue
1,252
–
–
Service revenue
–
–
––
Other revenue
1,252
–
Adjusted EBITDAaL
619
–
––
Adjusted EBITDAaL
margin
49.4%
–
Note:
1.
Vantage Towers is a new reporting segment for the year ended 31 March 2022 and hence no
comparative information is presented. See page 24 for more information.
Total revenue increased to €1.3 billion, with 1,700 new tenancies added
during the year, bringing the tenancy ratio to 1.44x. Vantage Towers
concluded a number of new partnership agreements during the year,
including an agreement with 1&1 in December 2021 for the provision
of
{
passive tower infrastructure access to at least 3,800 sites throughout
Germany by the end of 2025, and potentially up to 5,000 sites, for the
next 20 years, with an option to extend until 2060. Vantage Towers
reported its results on 16 May 2022.
Further information on Vantage Towers can be accessed at:
vantagetowers.com
Associates and joint ventures
FY22
€m
FY21
€m
VodafoneZiggo Group Holding B.V.
(19)
(232)
Safaricom Limited
217
217
Indus Towers Limited
–
274
Other
13
83
Share of results of equity accounted
associates and joint ventures
211
342
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo, in which Vodafone owns a 50% stake,
are
{
reported here under US GAAP, which is broadly consistent with
Vodafone’s IFRS basis of reporting.
Total revenue grew by 1.4% to €4.1 billion, primarily driven by mobile
contract customer base and ARPU growth, supported by higher roaming
and visitor revenue. This was partially offset by a slowdown in Consumer
fixed revenue growth in the second half of FY22.
During the year, VodafoneZiggo added 196,000 mobile contract
customers, supported by our best-in-class net promoter score, mainly
driven by higher Consumer demand. Strong Business fixed performance
was due to an increase in the customer base, as well as higher demand for
unified communications. The number of converged households increased
by 25,000, with 45% of broadband customers now converged, delivering
significant NPS and customer loyalty benefits. VodafoneZiggo now
offers
{
1 gigabit speeds to 5.8 million homes and is on track to provide
nationwide coverage in 2022.
During the year, Vodafone received €350 million in dividends from
the
{
joint venture, as well as €49 million in interest payments. The joint
venture also drew down an additional loan from shareholders to fund
an
{
instalment arising from spectrum licences acquired in July 2020,
with
{
Vodafone’s share being €104 million.
Safaricom Associate (Kenya)
Safaricom service revenue grew to €2.2 billion due to strong Business
fixed demand, and a recovery in M-Pesa revenue as transaction volumes
increased and peer-to-peer transaction fees normalised.
Indus Towers Associate (India)
The Group’s interest in Indus Towers has been provided as security
against certain bank borrowings secured against Indian assets and partly
to the pledges provided to the new Indus Towers entity (‘Indus’) under the
terms of the merger between erstwhile Indus Towers and Bharti Infratel.
Indus has been classified as held for sale in the condensed consolidated
statement of financial position since 31 March 2021 and the Group’s
share of Indus’ results is not reflected in the Group’s consolidated income
statement for the year ended 31 March 2022.
Vodafone Idea Limited Joint Venture (India)
See note 29 ‘Contingent liabilities and legal proceedings’ in the
consolidated financial statements for further information.
TPG Telecom Limited Joint Venture (Australia)
In July 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and
TPG
{
Telecom Limited (‘TPG’) completed their merger to establish a
fully
{
integrated telecommunications operator in Australia. The merged
entity
was admitted to the Australian Securities Exchange (‘ASX’) on
30
{
June
{
20
20 and is known as TPG Telecom Limited. Vodafone and
Hutchison Telecommunications (Australia) Limited each own an
economic interest of 25.05% in the merged unit.
Strategic report
Governance
Financials
Other information
30
Vodafone Group Plc
Annual Report 2022
Our financial performance (continued)
Net financing costs
FY22
€m
{
FY21
€m
{
Reported
change %
Investment income
254
330
Financing costs
(1,964)
(1,027)
Net financing costs
(1,710)
(697)
(145.3)
Adjustments for:
Mark-to-market gains
(256)
(1,091)
Foreign exchange losses
284
23
Adjusted net financing costs
1
(1,682)
(1,765)
4.7
Note:
1.
Adjusted net financing costs is a non-GAAP measure. See page 223 for
{
more information.
Net financing costs increased by €1,013 million, primarily due to
lower
{
mark-to-market gains on options held relating to the Group’s
mandatory convertible bonds and increased foreign exchange losses
on
{
intercompany funding arrangements. Adjusted net financing costs
remained broadly stable year-on-year, reflecting consistent average net
debt balances and weighted average borrowing costs for both periods.
Taxation
FY22
%
{
FY21
%
{
Change
pps
Effective tax rate
33.6%
87.8%
(54.2)
Adjusted effective tax rate
1
27.9%
26.9%
1.0
Note:
1.
Adjusted effective tax rate is a non-GAAP measure. See page 223 for more information.
The Group’s effective tax rate for the year ended 31 March 2022
was
{
33.6%. The effective tax rate includes a €1,468 million charge
(2021:
{
€2,128 million
*
) for the utilisation of losses in Luxembourg which
arises from an increase in the valuation of investments based upon local
GAAP financial statements and tax returns. The current year charge was
principally driven by increases in the value of our listed investments. The
effective tax rate also includes €327 million (2021: €320 million) relating
to the use of losses in Luxembourg and a credit of €699 million relating
to
{
the recognition of a deferred tax asset in Luxembourg because of
higher interest rates increasing our forecasts of future profits. The year
ended 31 March 2021 included a charge of €699 million
*
relating to
the
{
de-recognition of a deferred tax asset in Luxembourg. These items
change the total losses we have available for future use against our
profits
{
in Luxembourg and neither item affects the amount of tax we
pay
{
in other countries.
The effective tax rate also includes an increase in our deferred tax
assets
{
in the UK of €593 million (2021: €nil) following the increase in
the
{
corporate tax rate to 25% and €273 million (2021: €nil) following
the
{
revaluation of assets for tax purposes in Italy.
The Group’s Adjusted effective tax rate for the year ended 31 March 2022
was 27.9% (2021: 26.9%). This is in line with our expectations for the year.
The adjusted effective tax rate excludes the amounts relating to Luxembourg,
the impact of the UK tax rate change and revaluation of assets in Italy
which are set out above.
Earnings per share
FY22
eurocents
FY21
eurocents
Reported
change
eurocents
Basic earnings per share
7.20c
0.38c
6.82c
Adjusted basic earnings
per
{
share
1
11.03c
8.08c
2.95c
Note:
1.
Adjusted basic earnings per share is a non-GAAP measure. See page 223 for more information.
Basic earnings per share was 7.20 eurocents, compared to 0.38 eurocents
for the year ended 31 March 2021.
Adjusted basic earnings per share was
{
11.03 eurocents compared to
8.08
{
eurocents for the year ended 31
{
March
{
2021.
Consolidated statement of financial position
The consolidated statement of financial position is set out on page 130.
Details on the major movements of both our assets and liabilities in the
year are set out below.
Assets
Goodwill and other intangible assets decreased by €0.3 billion between
31 March 2021 and 31 March 2022 to €53.2 billion. This primarily reflects
the amortisation of computer software and licence and spectrum fees,
partially offset by additions in the year.
Property, plant and equipment decreased by €0.4 billion between
31
{
March 2021 and 31 March 2022 to €40.8 billion. This reflects a net
decrease in the carrying value of leased assets by €0.6 billion, partially
offset by an increase in the carrying value of owned assets.
Other non-current assets decreased by €0.6 billion between
31
{
March
{
2021
{
and 31 March 2022 to €31.4 billion, primarily due
to
{
a
{
€2.5
{
billion decrease in deferred tax assets offset by a €1.6 billion
increase in trade and other receivables.
Assets held for sale at 31 March 2021 and 31 March 2022 comprise the
Group’s interest in Indus Towers Limited. Further detail is provided in note
7 ‘Discontinued operations and assets held for sale’ to the consolidated
financial statements.
Current assets increased by €0.6 billion between 31 March 2021 and
31
{
March 2022 to €27.6 billion, primarily due to an increase of €1.7 billion
in cash and cash equivalents, a €0.2 billion increase in inventory, offset by
a €1.2 billion decrease in other investments.
Total equity and liabilities
Total equity decreased by €0.8 billion between 31 March 2021 and
31
{
March 2022 to €57.0 billion, due to comprehensive income for the
period of €5.0 billion, share-based payments of €0.1 billion, an increase
of
{
€0.2 billion arising from transactions with non-controlling interests
in
{
subsidiaries, offset by €3.0 billion of dividends paid to the Group’s
shareholders and the purchase of treasury shares of €3.1 billion.
Non-current liabilities decreased by €5.2 billion between 31 March 2021
and 31 March 2022 to €63.3 billion, primarily due to a €2.4 billion decrease
in trade and other payables, a €1.6 billion decrease in deferred tax liabilities,
a €1.1 billion decrease in borrowings and a €0.2 billion decrease in post
employment benefits.
Current liabilities increased by €4.9 billion between 31 March 2021 and
31 March 2022 to €33.6 billion, primarily due to a €3.5 billion increase in
borrowings, a €1.6 billion increase in trade and other payables, offset by a
€0.2 billion decrease in provisions.
Inflation
Inflation did not have a significant effect on the Group’s consolidated
results of operations and financial condition during the year ended
31
{
March 2022.
Note:
*
During the year ended 31 March 2022, we revised the calculation of certain impairment reversals
recognised by our Luxembourg holding companies for the year ended 31 March 2021; this had no
impact on the amount of deferred tax assets recognised at that date but has changed
the amount
of our unrecognised deferred tax assets by €0.7 billion (unrecognised losses of €2.8 billion).
31
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Cash flow, capital allocation and funding
Analysis of cash flow
FY22
€m
{
FY21
€m
{
Reported
change %
Inflow from operating activities
18,081
17,215
5.0
Outflow from investing activities
(6,868)
(9,262)
25.8
Outflow from financing activities
(9,706)
(15,196)
36.1
Net cash inflow/(outflow)
1,507
(7,243)
120.8
Cash and cash equivalents at
beginning of the financial year
5,790
13,288
Exchange gain/(loss) on cash and
cash equivalents
74
(255)
Cash and cash equivalents at
end of the financial year
7,371
5,790
Cash inflow from operating activities increased by 5.0% to €18,081 million,
primarily due to higher operating profit.
Outflow from investing activities decreased by 25.8% to €6,868 million,
primarily due to a decrease of €2,409 million (2021: €1,993 million
increase) in collateral assets held against derivative liabilities, partially
offset by purchases of other short-term investments and property, plant
and equipment.
Outflows from financing activities decreased by 36.1% to €9,706 million,
driven by an increase of €1,952 million (2021: €4,330 million decrease)
in
{
collateral liabilities held against derivative assets and lower borrowing
repayments compared to the previous year, partially offset by the
purchase of treasury shares of €2,087 million in the current year.
FY22
€m
FY21
€m
Reported
change %
Adjusted EBITDAaL
1
15,208
14,386
5.7
Capital additions
2
(8,306)
(7,854)
Working capital
(31)
564
Disposal of property, plant and
equipment and intangible assets
27
42
Restructuring costs
(267)
(356)
Integration capital additions
3
(314)
(329)
Restructuring and integration
working capital
(213)
(3)
Licences and spectrum
(896)
(1,221)
Interest received and paid
4
(1,254)
(1,553)
Taxation
(925)
(1,020)
Dividends received from associates
and joint ventures
638
628
Dividends paid to non-controlling
shareholders in subsidiaries
(539)
(391)
Other
181
217
Free cash flow
1
3,309
3,110
6.4
Acquisitions and disposals
138
447
Equity dividends paid
(2,474)
(2,427)
Share buybacks
4
(2,029)
(53)
Foreign exchange loss
(378)
(219)
Other movements on net debt
5
399
646
Net debt (increase)/decrease
1
(1,035)
1,504
Opening net debt
1
(40,543)
(42,047)
Closing net debt
1
(41,578)
(40,543)
(2.6)
Free cash flow
1
3,309
3,110
Adjustments:
–
Licences and spectrum
896
1,221
–
Restructuring costs
267
356
–
Integration capital additions
3
314
329
–
Restructuring and integration
working capital
213
3
–
Vantage Towers growth
capital expenditure
244
–
–
Special dividend in Egypt
194
–
Adjusted free cash flow
1
5,437
5,019
Notes:
1.
Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow and Net debt are non-GAAP
measures. See page 223 for more information.
2.
See page 233 for an analysis of tangible and intangible additions in the year.
3.
Integration capital additions comprises amounts for the integration of acquired Liberty Global
assets and network integration.
4.
Interest received and paid excludes interest on lease liabilities of €361 million outflow
(FY21:
{
€307 million) included within Adjusted EBITDAaL and €58 million of cash inflow (FY21:
€9
{
million) from the option structures relating to the issue of the mandatory convertible bonds
which is included within Share buybacks. The option structures were intended to ensure that the
total cash outflow to execute the programme were broadly equivalent to the amounts raised on
issuing each tranche.
5.
‘Other movements on net debt’ for the year ended 31 March 2022 includes mark-to-market
gains recognised in the income statement of €256 million (FY21: €1,091 million gain). The year
ended 31 March 2021 also included payments in respect of bank borrowings secured against
Indian assets of €83 million and payments to Vodafone Idea Limited of €235 million in respect
of the contingent liability mechanism.
Adjusted free cash flow increased by €418 million to an inflow
of
{
€5,437
{
million, resulting from an increase in Adjusted EBITDAaL
and
{
lower
{
interest received and paid, partially offset by an increase in
capital
{
additions and neutral working capital movements for the year.
Borrowings and cash position
FY22
€m
FY21
€m
Reported
change %
Non-current borrowings
(58,131)
(59,272)
Current borrowings
(11,961)
(8,488)
Borrowings
(70,092)
(67,760)
Cash and cash equivalents
7,496
5,821
Borrowings less cash and
cash
{
equivalents
(62,596)
(61,939)
(1.1)
Borrowings principally includes bonds of €48,031 million (FY21:
€46,885
{
million) and lease liabilities of €12,539 million (FY21:
€13,032 million).
The increase in borrowings of €2,332 million is principally driven by
an
{
increase of €1,952 million on derivative collateral positions, which
impacts both cash and short-term borrowings.
Strategic report
Governance
Financials
Other information
32
Vodafone Group Plc
Annual Report 2022
Return on capital employed
Return on capital employed (‘ROCE’) reflects how efficiently we are
generating profit with the capital we deploy.
FY22
1
€m
{
FY21
€m
{
Change
bps
Pre-tax ROCE (controlled)
1
7.2%
5.5%
1.7
Post-tax ROCE (controlled and
associates/joint ventures)
1
5.0%
3.9%
1.1
ROCE calculated using GAAP
measures
2
5.0%
4.4%
0.6
Notes:
1.
Pre-tax ROCE (controlled) and Post-tax ROCE (controlled and associates/joint ventures)
are
{
non-GAAP measures. See page 223 for more information.
2.
ROCE is calculated by dividing Operating profit by the average of capital employed as
reported
{
in the consolidated statement of financial position. See pages 230 and 231
for
{
the
{
detail of the calculation.
We calculate two ROCE measures: i) Pre-tax ROCE for controlled
operations only and ii) Post-tax ROCE including associates and
joint
{
ventures.
Pre-tax ROCE increased to 7.2% % (FY21: 5.5%). The increase reflects
a
{
strong increase in adjusted operating profit, lower amortisation on
licences and spectrum fees and a small decrease in average capital
employed. Similarly, post-tax ROCE increased to 5.0% (FY21: 3.9%).
ROCE using GAAP measures increased to 5.0% (FY21: 4.4%). The increase
reflects a higher operating profit during the year-ended 31 March 2022
coupled with a slight decrease in average capital employed.
Funding position
FY22
€m
FY21
€m
Reported
change %
Bonds
(48,031)
(46,885)
Bank loans
(1,317)
(1,419)
Other borrowings including
spectrum
(3,909)
(4,215)
Gross debt
1
(53,257)
(52,519)
(1.4)
Cash and cash equivalents
7,496
5,821
Short-term investments
2
4,795
4,007
Derivative financial instruments
3
1,604
3
Net collateral (liabilities)/assets
4
(2,216)
2,145
Net debt
1
(41,578)
(40,543)
(2.6)
Notes:
1.
Gross debt and Net debt are non-GAAP measures. See
{
page 223 for more information.
2.
Short-term investments includes €1,446 million (FY21: €1,053 million) of highly liquid
government and government-backed securities and managed investment funds of
€3,349
{
million (FY21: €2,954 million) that are in highly rated and liquid money market
investments with liquidity of
{
up
{
to 90 days.
3.
Derivative financial instruments excludes derivative movements in cash flow hedging reserves
of
{
€1,350 million gain (FY21: €862 million loss).
4.
Net collateral (liabilities)/assets on derivative financial instruments result in cash being (held)/
paid
{
as
{
security. This is repayable or receivable when derivatives are settled and is therefore
deducted from
{
liquidity.
Net debt increased by €1,035 million primarily as a result of Free cash
flow of €3,309 million, offset by equity dividends paid of €2,474 million
and share buybacks of €2,029 million (1,441 million shares) used to offset
dilution linked to mandatory convertible bonds.
Other funding obligations to be considered alongside net debt include:
–
Lease liabilities of €12,539 million (FY21: €13,032 million)
–
Mandatory convertible bonds recognised in equity of €nil
(FY21:
{
€1,904 million)
–
KDG put option liabilities of €494 million (FY21: €492 million)
–
Guarantees over Australia joint venture loans of €1,573 million
(FY21:
{
€1,489 million)
–
Pension liabilities of €281 million (FY21: €513 million)
The Group’s gross and net debt includes €9,942 million (FY21:
€7,942
{
million) of long-term borrowings (‘Hybrid bonds’) for which
a
{
50%
{
equity characteristic of €4,971 million (FY21: €3,971 million)
is
{
attributed by credit rating agencies.
The Group’s gross and net debt includes certain bonds which have been
designated in hedge relationships, which are carried at €1,316 million
higher value (FY21: €1,390 million higher) than their euro equivalent
redemption value. In addition, where bonds are issued in currencies other
than euros, the Group has entered into foreign currency swaps to fix the
euro cash outflows on redemption. The impact of these swaps is not
reflected in gross debt and if it was included would decrease the euro
equivalent value of the bonds by €1,456 million (FY21: €127 million).
.
Our financial performance (continued)
33
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Share buybacks
In March 2021, Vodafone started a series of irrevocable and non-discretionary
share buyback programmes, announced on 19 March 2021, 19 May 2021,
23 July 2021 and 17 November 2021 (the ‘programmes’). The sole purpose
of the programmes was to reduce the issued share capital of Vodafone to
offset the increase in the issued share capital as a result of the maturing of
the first tranche of the mandatory convertible bond (‘MCB’) in March 2021.
On 9 March 2022, Vodafone announced the
{
commencement of a new
irrevocable and non-discretionary share buyback programme, the sole
purpose being to reduce the issued share capital of Vodafone to partially
offset the increase in the issued share capital as a result of the maturing
of
{
the second tranche of the MCB in March 2022.
In order to satisfy the first tranche of the MCB, 1,426.8 million shares
were
{
reissued from treasury shares in March 2021 at a conversion
price
{
of
{
£1.2055. This reflected the conversion price at issue (£1.3505)
adjusted
{
for the pound sterling equivalent of aggregate dividends paid
in
{
August 2019, February 2020, August 2020 and February 2021. In
order
{
to satisfy the second tranche of the MCB, 1,518.6 million shares
were reissued from treasury shares in March 2022 at a conversion
price
{
of
{
£1.326. This reflected the conversion price at issue (£1.3505)
adjusted
{
for
{
the pound sterling equivalent of aggregate dividends
paid
{
in
{
August 2019, February 2020, August 2020, February 2021,
August
{
2021 and February 2022.
The current programme started on 17 March 2022 and is due to
complete on 15 November 2022. Details of the shares purchased
under
{
the programmes, including those purchased under irrevocable
instructions, are shown below.
Date of share purchase
Number of shares
purchased
1
000s
Average price
paid
{
for shares
inclusive of
transaction costs
{
Pence
Total number of
shares purchased
under publicly
announced
share
{
buyback
programmes
2
000s
Maximum number
of shares that may
yet be purchased
under the
programmes
3,4
000s
March 2021
52,682
134.60
52,682
204,141
April 2021
131,704
135.34
184,386
72,437
May 2021
118,095
135.71
302,481
222,580
June 2021
125,558
128.59
428,039
97,022
July 2021
125,558
118.35
553,597
439,452
August 2021
119,851
120.78
673,448
319,601
September 2021
125,558
118.04
799,006
194,043
October 2021
119,851
111.94
918,857
74,192
November 2021
125,548
113.18
1,044,405
382,307
December 2021
116,983
112.93
1,161,388
265,324
January 2022
116,966
120.70
1,278,354
148,358
February 2022
114,122
136.33
1,392,476
34,236
March 2022
101,056
126.41
1,493,532
953,699
April 2022
115,416
128.71
1,608,948
838,283
May 2022
(to 13 May)
54,671
120.98
1,663,619
783,612
Total
5
1,663,619
123.47
1,663,619
783,612
Notes:
1.
The nominal value of shares purchased is 20
20/21
US cents each.
2.
No shares were purchased outside the publicly announced share buyback programmes.
3.
In accordance with shareholder authority granted at the 2021 Annual General Meeting.
4.
The total shares repurchased under each programme were 256,822,895 shares completed on
18 May 2021, 268,237,246 shares completed on 23 July 2021, 467,988,432 shares completed
on 17 November 2021, and 433,662,325 shares completed on 8 March 2022.
5.
The total number of shares purchased represented 5.9% of our issued share capital, excluding
treasury shares, at 13 May 2022.
Dividends
The Board is recommending total dividends per share of 9.0 eurocents
for
{
the year. This includes a final dividend of 4.5 eurocents which
compares to 4.5
{
eurocents in the prior year.
Nick Read
Chief Executive
17 May 2022
Margherita Della Valle
Chief Financial Officer
17 May 2022
This year’s report contains the Strategic Report on pages 1 to 67,
which includes an analysis of our performance and position, a review
of
{
the business during the year, and outlines the principal risks
and
{
uncertainties we face. The Strategic Report was approved
by
{
the
{
Board and signed on its behalf by the Chief Executive and
Chief
{
Financial Officer.
Governance
Financials
Other information
34
Vodafone Group Plc
Annual Report 2022
Strategic report
We connect for a better future
Purpose, sustainability and responsible business
Our approach to ESG (Environmental, Social and Governance topics) is an integral part of our purpose
and
b
strategy to be a new generation connectivity and
b
digital services provider for Europe and Africa,
enabling
b
an
b
inclusive and sustainable digital society.
Our approach to ESG
Our purpose pillars
Below we have set out the main elements through which our approach to ESG is delivered. Our strategy helps to deliver our targets across three purpose
pillars: Inclusion for All, Planet, and Digital Society and ensures Vodafone acts responsibly and ethically, wherever we operate. We are also committed to
supporting the delivery of the UN Sustainable Development Goals (‘SDGs’).
Essential to our approach is transparency and measurement
Social contract: Activation and acceleration of our purpose initiatives
Read more
on pages 36-40
Read more
on pages 47-51
Read more
on page 56
Read more
on pages 41-44
Inclusion for All
Ensuring everyone has access to the benefits of a
digital society.
Access for all
Finding new ways to roll-out our network to rural
locations in our markets.
Propositions for equality
Providing relevant products and services to address
societal challenges such as gender equality and
financial inclusion.
Workplace equality
Developing a diverse and inclusive global workforce
that reflects the customers and societies we serve.
Planet
Reducing our environmental impact and helping
society decarbonise.
Climate change
Working to reduce our environmental impact to
reach net zero emissions across our full value chain
by 2040.
Carbon enablement
Helping our customers reduce their own carbon
emissions by 350 million tonnes by 2030.
E-waste
Driving action to reduce device waste and
progressing against our target to reuse, resell or
recycle 100% of our network waste.
Digital Society
Connecting people and things and digitalising
critical sectors.
Digitalising business
Providing products and services to support
business, particularly SMEs.
Digitalising agriculture
Supporting the digitalisation of agriculture with
specific products and services.
Revolutionising healthcare
Using our products, services and technology to
support the digitalisation of healthcare.
Read more
on pages 44-45
Protecting data
Customers trust us with their data and maintaining
this trust is critical.
Data privacy
We want to respect the privacy preferences of our
customers and help improve society through the
responsible use of data.
Cyber security
As a provider of critical national infrastructure and
connectivity that is relied upon by millions
{
of
customers, we prioritise cyber and
{
information
security across everything that we do.
Protecting people
Health and safety
Creating a safe working environment for everyone
working for and on behalf of Vodafone.
Mobiles, masts and health
Operating our networks within national regulations.
Human rights
Contributing to the protection and promotion of
human rights and freedoms.
Responsible supply chain
Managing relationships with our direct suppliers,
and evaluating their commitments to diversity,
inclusion and the environment.
Business integrity
We are committed to ensuring that our business
operates ethically, lawfully and with integrity
wherever we operate.
Tax and economic contribution
As a major investor, taxpayer and employer, we
make a significant contribution to the economies
of
{
the countries in which we operate.
Anti-bribery and corruption
We have a policy of zero tolerance towards bribery
or corruption. Our policy provides guidance on what
constitutes a bribe and prohibits giving or receiving
any excessive or improper gifts and hospitality.
Learn more about how we
help improve digital inclusion:
investors.vodafone.com/videos
Learn more about our approach
to cyber security:
investors.vodafone.com/videos
Learn more about our
net zero goal:
investors.vodafone.com/videos
Learn more about our
human rights approach:
investors.vodafone.com/videos
Learn more about our
approach to data privacy:
investors.vodafone.com/videos
Learn more about our
approach to tax:
investors.vodafone.com/videos
Our approach is underpinned by responsible business practices
Read more
on pages 52-53
Strategic report
Governance
Financials
Other information
35
Vodafone Group Plc
Annual Report 2022
Over the last year we have made progress against many of our key purpose targets. We also established
a new Board Committee to provide oversight of our ESG programme.
Our targets and achievements
Governance
The Executive Committee has overall accountability to the Board for
our
{
sustainable business strategy and regularly reviews progress. In
addition, each pillar of our purpose has an executive-level sponsor.
The
{
ESG Committee held its first two meetings this year and the Board
now benefits from dedicated oversight of our ESG programme. We also
continue to include ESG measures in the long-term incentive plan for
our senior leaders.
100%
renewable
electricity in
European markets
9
Target achieved
from July 2021, four
years ahead of our
original 2025 target.
23%
reduction in
Scope 1 and 2
emissions
By 2030 we will
fully abate all
carbon emissions
from Scope 1
and 2 activities and
halve our Scope 3
emissions.
32%
women in
management
and
b
senior
leadership roles
We aim to have
40%
{
women in
management roles
by 2030.
21.6
million additional
female customers
(Africa and Turkey)
since 2016
9
Target achieved,
four years ahead of
our original target.
52.4
million M-Pesa
customers
9
Target achieved
four years ahead of
our original target.
This year we set a
new target, aiming
to connect 75 million
customers to financial
services by 2026.
3.6m
V-Hub users
We aim to support
seven
{
million users
to
{
digitalise using
V-Hub by 2025.
2.9m
smallholder
farmers
registered on our
Connected Farmer
platform, supporting
them to digitalise.
Materiality
We have conducted a materiality assessment to identify the material and
emerging ESG issues relevant to our business, our stakeholders and the
societies in which we operate.
Click to read our materiality matrix –
vodafone.com/sustainable-business
Reporting frameworks
Vodafone reports against a number of voluntary reporting frameworks to
help stakeholders understand our sustainable business performance.
The Global Reporting Initiative (‘GRI’) is the most widely accepted
global standard for sustainability reporting. The GRI Standards
allow companies to report their material impacts for
{
a range of
economic, environmental and social issues. Our
{
2022 disclosure
is included in our 2022 ESG Addendum.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Due to increasing demand for sustainability information that
is
{
comparable, consistent and financially material, we have
published disclosures in accordance with the Sustainability
Accounting Standards Board’s (‘SASB’) Standards.
Click to read our SASB disclosures:
investors.vodafone.com/sasb
Vodafone is a participant in the United Nations Global Compact
(‘UNGC’). As part of this, Vodafone supports the Ten
{
Principles
of the United Nations Global Compact on human rights, labour,
environment and anti-corruption. Our 2022 Communication on
Progress can be found in our 2022 ESG Addendum.
Vodafone participates in the CDP’s annual climate
change questionnaire.
Click to read our CDP response:
vodafone.com/sustainbility-reports
GRI
SASB
UNGC
CDP
Read more on
page 44
Read more on
page 45
Read more on
pages 42-43
Read more on
page 39
Read more about the Board’s oversight of material
ESG
b
topics on page 89
Read more about the governance underpinning our
responsible business practices on pages 47-57
ESG governance structure
The role of the ESG Committee is to provide oversight of our
ESG
{
programme, sustainability and responsible business practices
as
{
well as our contribution to the societies we operate in under our
social contract.
Purpose and Reputation Steering Committee
ESG Committee
Executive Committee
Board
Read more on
pages 42-43
Read more on
page 37
Read more on
pages 37-38
Digital
Society
Executive-level
sponsor:
Vinod Kumar
Inclusion
for All
Executive-level
sponsor:
Serpil Timuray
Planet
Executive-level
sponsor:
Joakim Reiter
Strategic report
Governance
Financials
Other information
36
Vodafone Group Plc
Annual Report 2022
Our purpose
Our purpose is to connect for a better future
by
b
using
b
technology to improve lives and
enable
b
inclusive and sustainable digital
societies.
b
We
b
achieve this by focusing on three
pillars:
b
Inclusion
b
for All, Planet and Digital Society,
which
b
serve as the framework for everything we
do
b
at
b
Vodafone. Our purpose is underpinned by
our
b
responsible business practices: protecting
data,
b
protecting people and business integrity.
Our three purpose pillars are focused on integrating environmental and
social considerations into our business strategy and priorities. To further
embed this approach, this year we established a new ESG Committee as
a
{
formal committee of the Board. This will provide strategic support for
our ESG ambitions, and ensure effective oversight of our ESG strategy.
Read more on our ESG Committee
on page 89
The role of business in society is changing, accelerated by the COVID-19
pandemic. Recognising this, we continue to evolve our social contract,
which is the partnership we wish to develop with governments, policy
makers and civil society. We use the social contract to understand what
matters the most to the societies and economies we work in, and activate
our purpose around these. This year we transitioned our social contract
focus to ‘BuildBackBetter’ by deploying initiatives to address societal
challenges created by the pandemic.
For example, aligned to the EU’s focus on a green recovery from
COVID-19, we accelerated the delivery of our target on renewables,
and
{
achieved 100% renewable electricity use in Europe and Turkey
from
{
July 2021, four years ahead of our 2025 target date.
Our response to the war in Ukraine
In response to the war in Ukraine, we have been offering support to our
customers and communities. The humanitarian part of our comprehensive
response is coordinated through the Vodafone Foundation, in line with
our policy for all charitable activities to be led and funnelled by our
Foundations. The situation is fast evolving at the time of writing, but we
have donated over €3 million in contributions and services in-kind in
response, including:
–
Free roaming, calls and texts in our European markets for Vodafone
Ukraine’s customers who have left Ukraine (we have a partner market
agreement with Vodafone Ukraine);
–
Free calls and text messages to Ukraine;
–
Offering fast-track employment opportunities for those displaced by
the crisis (Ukrainians, or other nationals, who have fled the country to
find safety);
–
Vodafone Group Foundation has donated €500,000 from its
Humanitarian Fund to UNHCR and local Vodafone Foundations in
Czech Republic, Romania and Hungary; and
–
Vodafone employee volunteers travelled to Romania and Hungary
to
{
help install free-to-use instant WiFi and charging points for mobile
phones to help refugees crossing the border.
Further to these voluntary measures, on 8 April 2022 Vodafone signed
a
{
joint statement with other telecom operators in the EU, with the aim of
establishing a coordinated approach to ensuring connectivity to refugees
from Ukraine. In particular, Vodafone has committed to continuing to
implement voluntary measures, namely to maintain lower wholesale
charges for roaming and termination rates.
The following sections provide an overview of our purpose pillars and
targets, as well as the achievements over the past year.
Purpose
Our Inclusion for All strategy seeks to ensure no one
is
b
left behind. It focuses on access to connectivity,
digital
b
skills and creating relevant products and
services, such as access to education, healthcare
and
b
finance. We
b
are also committed to developing
a
b
diverse and inclusive global workforce that reflects
the customers and societies we serve.
With more than 4.9 billion
1
people now online, the internet has
become
{
a
{
vital part of our lives by enabling us to keep in touch
and
{
access government services, health information, banking and
entertainment. However, 2.9 billion people remain offline
1
, 96% of
whom
{
live in developing countries. We operate in four countries
2
that are
designated by the United Nations as Least Developed Countries (‘LDCs’)
where just 27%
1
of people are online, and the challenges facing the
unconnected are even more pronounced.
Our Inclusion for All strategy focuses on overcoming the five key barriers
that create the digital divide – coverage, access to devices, affordability,
digital skills, and creating relevant products and services for those most
at
{
risk of being unconnected, such as the elderly and women.
This year we have made significant progress across a number of areas,
increasing coverage, supporting customers to afford 4G devices, and
developing new services that help customers unlock more opportunities.
We have also pushed ourselves to set new targets and create new
partnerships across a number of inclusion areas, for example setting
a
{
new financial inclusion target this year.
Closing the digital divide
Connecting everyone to digital services, particularly across Africa,
is
{
a
{
significant challenge. Fixed and mobile services are increasing
globally,
{
with 4G networks reaching 88%
3
of the world’s population.
We
{
recognise that internet access is transformational, empowering
people to meaningfully contribute and connect, and so we
must
{
continue
{
to upgrade and expand our networks to achieve
meaningful
{
connectivity.
Expanding coverage to rural networks remains a focus for us with 25%
4
of
the EU population and 59%
4
of the population in Sub-Saharan Africa living
in rural areas. Expansion of rural networks can often be more challenging
and have a lower return on investment due to lower population densities.
New approaches, partnerships and a blend of technologies will help us to
overcome some of these barriers and help deliver universal coverage.
We have also continued to work with our partners AST & Science LLC
to
{
develop the first space-based mobile network to connect directly
to
{
consumer 4G and 5G smartphones without the need for specialised
hardware. This partnership aims to provide mobile coverage in the
Democratic Republic of the Congo, Ghana, Mozambique, Kenya and
Tanzania. The AST mobile network will ultimately reach an estimated
1.6
{
billion people across 49
{
countries.
In Europe we are working to raise investment to boost high-speed
connectivity in rural areas, creating Smart Villages and Cities that
support
{
businesses, citizens and the environment. We are also increasing
investment in rural areas, helping farmers and other rural small businesses
overcome barriers to connectivity.
Inclusion for All
Notes:
1. ITU,
2022.
2.
Markets designated as LDC’s – DRC, Mozambique, Lesotho and Tanzania.
3. ITU,
2021.
4.
World Bank, 2020..
37
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Strategic report
Governance
Financials
Other information
The digital divide goes beyond just being connected and unconnected.
4G is now available to more than half of Africa’s population, but accounts
for just 15% of connections, on average, compared to 57% globally. There
are strong economic benefits from increased 4G connectivity. Research
from the World Bank shows that it can reduce the number of households
in extreme poverty by 4.3 percentage points, mainly due to increases
in
{
labour force participation, particularly among women
1
. Furthermore,
expanding mobile broadband penetration across Africa by 10% could
boost GDP per capita by 2.5%
2
.
There are many barriers preventing the use of 4G, including lack of awareness,
digital skills, and the prohibitive upfront cost of smartphones. We know tha
t
the vast majority of those offline, 2.5 billion of the 2.9 billion unconnected,
live within mobile broadband coverage. Given that smartphones are
increasingly the main gateway to digital services, lowering the cost
of
{
devices is key to addressing the digital divide. We run a number
of
{
programmes designed to reduce the cost of a smartphone, from
applying
{
subsidies, to offering financing to customers to shift from 2G
to
{
4G handsets.
Last year in partnership with Google, Safaricom launched a device-
financing initiative called Lipa Mdogo Mdogo (Pay Little by Little). Lipa
Mdogo Mdogo offers a flexible payment plan with an 85% reduction in
the
{
upfront cost (a customer pays 500Kshs upfront) and an affordable
daily fee of 20Kshs. So far, 600,000 4G devices have been connected
through the Lipa Mdogo Mdogo initiative.
This year, in his role as commissioner to the UN Broadband Commission
for Sustainable Development, our Chief Executive, Nick Read, chaired
a
{
new working group to forge multi-stakeholder action to connect
3.4
{
billion people with smartphones by 2030.
In order to drive digital inclusion to the hardest-to-connect communities,
we also announced in March 2022 that Vodafone will invest US$190 million
over the next five years to increase our 4G population coverage to an
additional 80 million people in Sub-Saharan Africa
3
. This means that
we
{
have committed to increase our 4G population coverage from 54%
(higher than the African average of 49%) to approximately 85% across six
Sub-Saharan African countries. This targeted intervention includes four of
the least developed counties (‘LDCs’) – Mozambique, Tanzania, Lesotho
and the Democratic Republic of the Congo – and will help to close a
particular gap in internet usage between urban communities and rural
communities. This pledge was made as part of the ITU Partner2Connect
digital coalition and we will continue to develop other partnerships to help
us achieve this goal.
FY22 network deployment
4G sites deployed
(000s)
4G population
coverage
Europe
1
131.2
98.2%
Africa
2
29.5
64.8%
Group
1,2
160.7
81.6%
Notes:
1.
Excluding Vodafone Ziggo and including Turkey.
2. Excluding
Safaricom.
Read more on our approach to closing the digital
divide
b
through partnerships here:
vodafone.com/
closing-the-digital-divide-through-partnership
Addressing the digital gender gap
Goal: To connect an additional 20 million women living in Africa
and
b
Turkey to mobile by 2025
Despite efforts to close the gender digital divide, the majority of those
still
{
unconnected are women. The latest data from the GSMA
4
indicates
progress to close this gender gap has stalled. Research indicates that
women who have access to mobile internet via a smartphone have
9%
{
higher levels of wellbeing than women who have access via a basic
or
{
feature phone
5
. However, across low and middle-income countries
women are 18% less likely than men to own a smartphone and 16%
less
{
likely to use mobile internet
5
.
Key barriers preventing women in emerging markets from using the
internet include relevance of services, cost and adequate digital skills. We
focus on the first, relevance of services, as a strategy to increase women’s
access. For example, in many African markets gaining access to quality
health information and antenatal care can be very difficult. Information
delivered by mobile can help to bridge some of the gaps in crucial, basic
information. Responding to this, our Mum & Baby service continues
to
{
grow, giving customers free access to maternal, neonatal and child
health
{
information in South Africa and DRC. The service has over 2.1 million
registered users in South Africa, helping parents and caregivers to take
positive actions to improve their children’s health.
In part thanks, to services such as Mum & Baby, since 2016 we
estimate
{
we have connected to our network an additional 21.6 million
female customers in Africa and Turkey. The increase of women in our
customer base also makes good business sense; women have a higher
Net Promoter Score (+4 percentage points compared to men).
Female customers (million)
2016 (baseline)
FY21
FY22
Africa
1
38.1
52.9
58.3
Turkey
7.2
8.4
8.6
Total
1
45.3
61.3
67.0
Note:
1. Including
Safaricom.
Building platforms for financial inclusion
Goal: To connect 50 million people and their families to mobile
money
b
services by 2025
Two billion people remain unbanked globally
4
. Digital services are key to
helping people access safe, secure financial services. Without the ability
to
{
transfer money, people are limited in their ability to save, access loans,
start a business and even be paid.
Together with Safaricom, we developed the first mobile money platform,
M-Pesa, which provides financial services to millions of people who have a
mobile phone but limited access to a bank account. It is also widely used
to manage business transactions and to pay salaries, pensions, agricultural
subsidies and government grants, and reduces the associated risks of
robbery and corruption in a cash-based society.
Over 19 billion transactions were made in the year using M-Pesa, the
equivalent of around 2 million per hour on average through a network
of
{
more than 600,000 agents.
As of the end of March 2022, 52.4 million customers were using M-Pesa
(or equivalent). This marks a significant milestone and we have exceeded
our goal to connect 50 million people and their families to mobile fi
na
nc
ial
services four years ahead of our original target date. The breakdown of
customers per market is detailed in the table on the next page.
Notes:
1.
World Bank, 2020.
2. ITU,
2019.
3.
Covering Mozambique, Lesotho, Tanzania, DRC, Ghana and South Africa.
4. GSMA,
2021.
5. GSMA,
2022.
Scan or click to watch a video summarising how our
products and services help close the digital divide:
investors.vodafone.com/videos
Strategic report
Governance
Financials
Other information
38
Vodafone Group Plc
Annual Report 2022
To deepen our commitment to financial inclusion, and building on the success
to date, we have created a new target to connect 75
{
million customers
to
{
mobile money and financial inclusion services by
{
31 March 2026.
As
{
we
{
committed last year, this target includes multiple financial service
platforms and products and sets our path to help close the financial divide.
This new target will include not just M-Pesa customers, but customers
of
{
other services that contribute to financial inclusion. For example,
Vodacom launched our new VodaPay super-app in October 2021 and
this will be a key part of delivering this target. The VodaPay super-app for
smartphone users in South Africa offers access to digital financial services
as well as online shopping and lifestyle tools. The introduction of this
platform allows users to securely upload and store their money in a digital
wallet, pay bills, send money or make purchases without the registration
delays typically associated with setting up a traditional bank account in
Africa. The VodaPay super-app has 1.6 million current registered users.
Mobile money services adoption
Number of
mobile money
customers (million)
% of
service revenue
% penetration
of base
Kenya (Safaricom)
30.5
38%
93%
Tanzania
6.8
34%
56%
Mozambique
5.2
24%
71%
Democratic Republic of
the Congo
3.5
15%
30%
Lesotho
1
12%
82%
Egypt
3.5
2%
10%
Ghana
1.9
4%
53%
Total
52.4
22%
57%
Enabling quality education and digital skills
Even before the COVID-19 crisis, an estimated 258 million children around
the world were not in school
1
. More than half of all children globally were
not meeting the minimum expected standards in reading and mathematics
1
.
The COVID-19 pandemic highlighted the need to adapt teaching to the
new realities of increasingly digital societies. We have continued to grow
our Connected Education programme, providing access to our ready-
made classroom which includes connectivity, devices, and collaboration
software for students and teachers across the world. To date, around
1.5
{
million students and teachers in 4,500 educational institutions across
10
{
countries have benefited from this digital learning solution, helping
to
{
bridge the digital divide.
In South Africa, the Vodacom e-School solution allows learners to access
curriculum-aligned content and educators to access learning materials on
their smartphone with no data charges. We currently have over 1.3 million
users on the platform.
Vodafone Foundation previously committed to invest €20 million to
expand digital skills and education programmes across Europe, aiming
to
{
reach over 16 million learners by 2025
2
. To date, the programme has
reached 1.2 million students and teachers.
In June 2021, Vodafone Foundation and UNHCR expanded their Instant
Network Schools programme which has helped to support over 94,000
refugee students and communities in four African countries. Two new
Instant Network Schools have been established in Mozambique, located
in the Maratane Refugee Settlement and the city of Nampula. These
will
{
transform existing classrooms into multimedia hubs for learning,
complete with internet connectivity, sustainable solar power and a
robust
{
teacher training programme. Together this will benefit nearly
9,000
{
students, 25,000 family members and over 200 teachers.
Purpose (continued)
Workplace equality
As part of our purpose, we are committed to making the world more
connected, inclusive and sustainable, where everyone can truly be
themselves and belong. We bring the human touch to our technology
to
{
create a better digital future for all, starting with our people.
Our people
We are developing a diverse and inclusive global workforce that reflects
the customers and societies we serve.
Key information
2022
2021
Average number of employees
1
95,008
94,274
Average number of contractors
8,784
10,481
Employee contract types
Permanent
87%
87%
Fixed term contracts
13%
13%
Full-time
93%
93%
Part-time
7%
7%
Number of markets where we operate
19
19
Employee nationalities
134
137
Employees and contractors across
the Group
Germany
2
14%
14%
UK
2
9%
9%
Italy
2
5%
5%
Spain
2
4%
4%
Vodacom Group
2
11%
11%
Other Markets
3
25%
26%
Vantage Towers
2
0%
0%
_VOIS and Shared Operations
4
32%
31%
Employee experience
Employee engagement index
5
73
74
Alignment to purpose
5
93%
93%
Voluntary turnover rate
6
14%
8%
Involuntary turnover rate
6
3%
3%
Notes:
All headcount figures exclude non-controlled operations such as in the Netherlands, Kenya,
Australia and India.
1.
Calculation considers employee pro-rated headcount.
2.
The percentages reflect headcount in each operating company or group of operating
companies, such as the Vodacom Group.
3.
Other Markets includes employees based in all other operating companies (Albania,
Czech
{
Republic, Egypt, Ghana, Greece, Hungary, Ireland, Portugal, Romania, Turkey) and
other
{
countries.
4.
_VOIS and shared operations constitute a significant number of employees. The figures
presented above include _VOIS headcount across our footprint (India, Romania, Hungary,
Egypt
{
and Albania), as well as headcount in our global Group entities.
5.
More detail on the employee survey is included on page 21. The employee engagement index
is
{
based on a weighted average index of responses to three questions: satisfaction working
at
{
Vodafone; experiencing positive emotions at work; and recommending us as an employer.
Alignment to purpose is based on a single question that asks whether employees feel their daily
work contributes significantly to Vodafone’s purpose. Employee engagement index and purpose
alignments scores reflect September 2021 data.
6.
The pandemic saw voluntary attrition levels fall in 2021. However, as vaccine programmes
progress and restrictions lift, we are seeing turnover return to slightly higher than pre-pandemic
levels. We are monitoring the situation closely through exit interviews and also introducing
specific and proactive retention approaches in place where required. The voluntary turnover
rate includes retirements and death-in-service.
Notes:
1. UNESCO,
2018.
2.
Beyond digital training, the Vodafone Foundation builds programmes around the world that
combine Vodafone’s charitable giving and technology to deliver public benefit and improve
people’s lives. The total amount donated by Vodafone to Vodafone Foundation in 2022 was
€47.4
{
million.
39
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Annual Report 2022
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Other information
Diversity and inclusion
Our focus is on removing barriers to workplace equality. This year we
have
{
accelerated momentum on gender equality, sustained focus on
embedding inclusion, set solid foundations on race and ethnicity, and
began ensuring the physical and digital workplace is fully accessible.
An
{
expanded focus on practising inclusion supports our ambition to
create a
{
global workforce that reflects the customers, communities
and
{
colleagues we serve, and the wider societies in which we operate.
Embedding inclusion to enable diversity is critical to achieving these
goals
{
in a sustainable way.
Gender diversity
Goal: We aim to have 40% women in management roles by 2030
We have reached 32% which is on track towards our ambition.
We
{
continue to drive progress through programmes, policies and
leadership
{
incentives.
2022
2021
Women on the Board
50%
45%
Women on the Executive Committee
29%
29%
Women in senior leadership positions
1
31%
30%
Women in management and senior leadership roles
2
32%
32%
Women as a percentage of external hires
42%
43%
Women as a percentage of graduates
53%
53%
Women in overall workforce
40%
40%
Notes:
1.
Percentage of senior women in our top 191 positions (FY21: 178).
2.
Percentage of women in our 6,727 management and leadership roles (FY21: 6,609).
Women in management and diversity
We work to ensure there is gender diversity when resourcing for senior
leadership roles and our leadership team is accountable for maintaining
diversity and inclusion amongst their teams. Women in management
targets are also embedded in our long-term incentive plans. Our progress
and achievements to increase diversity have been recognised externally
as Vodafone has been included in the Bloomberg Gender Equality Index
for the fourth consecutive year.
Across youth programmes, 51% of hires were women, including 53%
of
{
all graduate hires, 53% of all internship hires and 39% of all hired
apprentices. We have also now connected with over 6,000 girls via the
digital skills programme ‘Code Like a Girl’ since 2017, including 994 this
year as we continued this programme during the pandemic by launching
a digital coding classroom experience, available to all markets.
Domestic violence
In 2019, Vodafone launched the first global domestic violence policy
in
{
the workplace, which set out comprehensive workplace resources,
security and other measures for employees at risk of experiencing,
and
{
recovering from, domestic violence and abuse. As most of the
global
{
workforce shifted to home working following the outbreak
of
{
COVID-19, reports of a ‘shadow pandemic’ of domestic violence
intensified worldwide.
We continue to provide support in this area through global training,
‘Apps
{
Against Abuse’, and a publicly available toolkit to support survivors.
‘Apps Against Abuse’ includes the Bright Sky app, which provides support
and information to anyone in an abusive relationship or those concerned
about someone they know. To date, the Vodafone Foundation’s portfolio
of ‘Apps Against Abuse’ has connected 1.6 million people to information,
advice and support.
Menopause
Our research identified that 62% of women with symptoms of
menopause found it impacted their work. In March 2021, we made
a
{
global commitment to support women experiencing menopause,
including the release of a global toolkit. For World Menopause Day in
October 2021, Vodafone’s menopause toolkit became freely available
to
{
download externally. In March 2022, we launched a menopause
e-learning – a short course introducing the menopause, common
symptoms and the impact on work with tips for managers, colleagues,
family and friends.
Maternity and parental leave
Our global maternity and parental leave policies are available across
markets, providing 16 weeks of fully paid leave with a phased return to
work over six months, where parents work the equivalent of four days and
are paid for five days. This policy is open to all employees regardless of
gender, sexual orientation, length of service, and whether their partner
is
{
having a baby, or they are welcoming a child through surrogacy or
adoption. This year, over 1,900 women have utilised our maternity leave.
Over 1,300 men have taken parental leave, with 53% of the latter taking
four or more weeks of leave.
Embedding inclusion
Alongside gender equality, we retained our focus on supporting the
LGBT+ community with over 3,800 allies and active support from senior
executives. We continued to be recognised as a Top Global Employer
by
{
Stonewall.
Multiple employee networks operate across Vodafone including Women,
VodAbility, Carers and Multicultural Inclusion. We support them actively
and provide Network Chairs with specific leadership development
focused on effectively setting up and running an employee network.
Global Withstander training has been rolled out in 10 languages to
upskill
{
employees on how to become active allies by challenging
negative and inappropriate behaviours when they witness them, with
over
{
33,000 employees completing it during the year. In March 2022,
we
{
launched a
{
global allyship ‘train-the-trainer’ programme to sustain
the
{
focus across all areas of inclusion.
We continued to engage with colleagues and raise awareness on why
inclusion matters. During the year, we held global webinars focused on
gender and ethnic diversity, the LGBT+ community, and disabilities. These
were hosted by Vodafone’s CEO and Executive Committee members, with
over 16,500 viewers across all webinars.
Strategic report
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Other information
40
Vodafone Group Plc
Annual Report 2022
Purpose (continued)
Race, ethnicity, and cultural heritage (‘REACH’)
We continue to improve workforce capability in holding conversations
on
{
race in the workplace. To better understand representation across
the
{
organisation and inform our diversity and inclusion programmes,
in
{
November 2020 we launched the ‘#CountMeIn’ initiative which
encourages employees to voluntarily self-declare their diversity
demographics. These include race, ethnicity, disability, sexual orientation,
gender identity and caring responsibilities, in line with local privacy and
legal requirements. On this basis we were able to set ethnic diversity
targets, which are summarised below.
Ethnic
category
31 March
2022
Long-term
ambition
Population
Global
Ethnically
diverse
background
18%
2030:
25%
Global Senior
Leadership Team
(163 positions)
UK
Black, Asian,
other diverse
ethnicities
15%
2025:
20%
UK-based senior
leadership
{
and
management
(1,452
{
positions)
UK
Black
1%
2025:
4%
South Africa
Ethnically
diverse
background
64%
2030:
75%
South African-
based senior
leadership and
management
(416 positions)
In addition to the above, 29% of our Executive Committee members
are
{
from ethnically diverse backgrounds. The plan is to expand
ethnicity
{
disclosure throughout our markets as we collect more
globally
{
consistent
{
data.
Our new REACH targets are supported by an action plan to achieve
greater workplace inclusion through allyship and anti-racism. REACH
fluency training was introduced to increase confidence and capability
to
{
talk about race and completed by all members of the Executive
Committee, as well as their direct reports. The plan also includes
reciprocal mentoring, external cross-company mentoring and
McKinsey
{
Black Leadership Academy participation.
Physical and digital accessibility in the workplace
We have joined the ‘Valuable 500’ – a group of 500 companies
committed to disability inclusion in business. The commitments are
focused on creating a physically and digitally accessible environment.
We hosted a global event on ‘International Day of People with
Disabilities’,
{
attended by 4,600 employees, which featured initiatives
that
{
help create an inclusive workplace for customers and employees
with visible and
{
invisible differences. We also hosted a neurodiversity
training for employees to ensure awareness of accessibility features in
the
{
digital workplace.
During the year, we delivered six accessibility workshops focused on
disability inclusive technology, covering all of the existing tools within
Office 365 which support accessibility in a hybrid working environment.
We have also embedded disability assistive technology standards (WCAG
AA standard) into procurement and internal development processes,
ensuring compatibility of all new platforms, products or tools procured
with assistive technology.
Policies, initiatives and targets
Our commitment to diversity and inclusion is reflected across our
global
{
policies and principles, such as the Code of Conduct and our
Fair
{
Pay principles.
Read more about these Fair Pay principles
on page 106
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
The achievement of our diversity targets is dependent on the attraction,
engagement and retention of diverse talent and skills. To support this,
we
{
have inclusive initiatives such as: hybrid and flexible working, parental
leave, mental health toolkit, learning and development programmes
(e.g.
{
Black Leadership Academy), allyship training and menopause
support, reinforced by the work of employee networks and executive
sponsors. Programmes are designed to help employees through all life
stages and challenge societal norms so everyone can be themselves at
work and belong.
Read more about diverse talent, future ready skills
and
b
personalised employee experience on pages 22 to 23
41
Vodafone Group Plc
Annual Report 2022
Strategic report
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Other information
As the COP26 UN Climate Change Conference in
Glasgow highlighted, urgent and sustained action
is
b
required to address the climate emergency.
We
b
believe business success should not come at a
cost to the environment, and we are committed to
reducing the impact of our activities. We also see a
key role for our digital networks and technologies in
helping to address climate change. Digitalisation is
key to saving energy, using natural resources more
efficiently and creating a
b
circular economy.
COP26 in Glasgow marked a step forward in global efforts to address the
climate emergency, including a material increase in ambitions to reduce
emissions, finalisation of rules on reporting emissions and international carbon
trading, and the launch of a range of new initiatives and sector commitments.
In July 2021 we reached a key milestone in our journey to net zero by
2040, achieving our goal to purchase 100% renewable electricity in all
of
{
our European markets. We are working to achieve the same in our
African markets by 2025. As part of this commitment we are also placing
significant focus on innovative sustainable power solutions that can be
deployed at scale, for example, working with external organisations to
develop self-powered mobile masts and install micro turbines.
To help deliver a twin digital and green transformation, in February 2022
we announced our circular economy plan to help extend the life of mobile
phones and increase the reuse and responsible recycling of handsets. Starting in
our European markets, our customers will be offered circular economy services
such as
insurance, support and repairs for their devices, supported by a digital
platform making it straightforward for customers to agree trade-in options.
We also continued our work to identify climate change risks and opportunities
through conducting Task Force on Climate-related Financial Disclosures
(‘TCFD’) scenario-based risk and opportunity assessments across key markets.
We are using the insights to create mitigating controls and identify ways to
embed climate risk into our risk management system and processes.
Read more on Vodafone’s approach to climate change
risk
b
aligned to the TCFD on page 66
Our Planet goals
2025
–
Purchase 100% of the electricity we use globally from
renewable sources
–
Reuse, resell or recycle 100% of our network waste
2030
–
Fully abate all carbon emissions (‘net zero’) from our own
activities and from energy we purchase and use (Scope 1 and
{
2)
–
Halve carbon emissions from our carbon footprint (against
{
a
2020 baseline), including joint ventures, all supply chain
purchases, the use of products we have sold
{
and business
travel (Scope 3)
–
Enable our business customers who use our services to
reduce
{
their own carbon emissions by a cumulative total
of
{
350 million tonnes between 2020 and 2030
2040
–
Fully abate Scope 3 emissions to reach ‘net zero’ across our
full carbon footprint
Reducing carbon emissions
Goal:
To reduce our own carbon emissions to
ȁ
net zero’ by 2030
and
b
across the full value chain by 2040
In 2020 we set an approved 2030 Science-Based Target in line with
reductions required to keep warming to 1.5°C, becoming the first major
telecoms operator to follow the emission reduction pathway developed
for the ICT
{
sector (setting out specific emissions reduction trajectories for
mobile, fixed and data centres).
Planet
We also committed to reaching full value chain ‘net zero’ emissions
by
{
2040. We are currently in the process of validating our targets with the
recently updated Net Zero Standard issued by the Science-Based Targets
initiative (SBTi) and expect this to be completed during 2022.
As part of our transition towards net zero we are committed to improving
our own generation of renewable energy through rolling out on-site
solutions such as solar panels. We are also working on new innovative
solutions. In January 2022, Vantage Towers committed to installing over
750 micro wind turbines across 52 sites in Germany, working in partnership
with the energy startup MOWEA. It is estimated that the green energy
generated on site in average wind conditions will cover 100% of each
tower’s energy requirements. In 2021, Vodafone UK also began a trial of
Eco-towers, working with Crossflow Energy and Cornerstone to deploy
self-powered mobile masts utilising wind turbines, solar power and battery
technology. Eco-towers will enable new mobile sites to be deployed in
remote locations across the UK, overcoming the major rural challenge of
connecting to the grid.
Click to read more about our self-powered mobile
masts – vodafone.com/self-powered-mobile-masts
Driving energy efficiency
Despite the ever-growing use of data and expansion of our networks,
this
{
year our total Scope 1 and 2 GHG emissions decreased by 23%
to
{
1.09 million tonnes of CO
2
e (carbon dioxide equivalent), due to our
ongoing focus on energy efficiency and an increase in the proportion
of
{
renewable electricity purchased.
We are committed to continually improving the energy efficiency of our
base station sites and in our technology centres, which together account
for 96% of our total global energy consumption.
We continue to implement the ‘best in class’ ISO 50001 Energy
Management Standard globally. To date, 11 operating companies and
Safaricom have been awarded certification, with further markets due to
implement the framework in the next year.
As part of the implementation of ISO 50001, we engage with suppliers
on
{
energy efficiency improvements in both hardware and software
solutions. Key suppliers are benchmarked biannually, with energy
efficiency included within the evaluation criteria. The supplier
engagement has also been supported and reinforced by the inclusion
of
{
energy efficiency as a key requirement in the ‘Request for Quotation’
(‘RFQ’) processes.
In addition to working with suppliers, we collaborate with others in the
industry and trial new modes of operating. In Spain, our active sharing
programme has led to reduced hardware requirements and energy
savings of 12 GWh.
Whilst we focus on energy efficiency, we are also focused on increasing
our renewable supply. We have been deploying further solar photovoltaic
(‘PV’) cells and increasing our annual renewable generation to 13 GWh p.a.,
a
{
year-on-year increase of 68%.
All these programmes are underpinned by our energy data management
and analytics system which collects and stores data feeds from our
electricity suppliers and from smart meters. This system is now live
across
{
11 markets in Europe, with smart meters installed at over
45,000
{
sites. This year we have developed new energy modelling
capabilities for active mast equipment and data centres.
Scan or click to watch a video summarising
how we plan to reach net zero by 2040:
investors.vodafone.com/videos
Strategic report
Governance
Financials
Other information
42
Vodafone Group Plc
Annual Report 2022
Purpose (continued)
Our performance
1
Unit
2022
2021
Total Scope 1 and Scope 2 emissions
Million tonnes of CO
2
e
1.09
1.42
Scope 1 emissions
Million tonnes of CO
2
e
0.28
0.30
Scope 2 emissions
Million tonnes of CO
2
e
0.82
1.12
Scope 3 emissions
Million tonnes of CO
2
e
9.2
9.4
Joint ventures and associates
Million tonnes of CO
2
e
2.6
3.2
Purchased goods and services
Million tonnes of CO
2
e
3.9
4.0
Use of sold products
Million tonnes of CO
2
e
1.7
1.5
Fuel and energy-related activities
Million tonnes of CO
2
e
0.8
0.6
Other (business travel, upstream leased assets, waste)
Million tonnes of CO
2
e
0.2
0.1
Renewable electricity
Percentage of purchased electricity from renewable sources
%
77
55
Percentage of purchased electricity from renewable sources in Europe
%
96
79
GHG emissions intensity
Scope 1 and 2 GHG emissions per EURm revenue
Tonnes of CO
2
e
23.9
32.4
Vodafone energy use
Base stations and technology centres
Gigawatt hours / %
5,686 / 96
5,750 / 96
Offices and retail stores
Gigawatt hours / %
239 / 4
246 / 4
Total
Gigawatt hours / %
5,926 / 100
5,997 / 100
Note:
1.
Data calculated using local market actual or estimated data sources from invoices, purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with GHG Protocol
standards. Scope 2 emissions are reported using the market-based methodology. For full methodology see our ESG Addendum 2022.
Purchasing renewable electricity
This year we reached our target of powering our entire European
operations with electricity from 100% renewable sources. This was
achieved from July 2021, a significant acceleration of our original target of
2025 and a major milestone towards our ‘net zero’ goal. This achievement
was shared across our European markets with a consumer campaign
which turned Vodafone’s recognised brand green across digital and
social
{
channels.
We are committed to making the same step-change in Africa by 2025.
For
{
example, installing solar PV solutions in Egypt and South Africa, whilst
working with local governments to facilitate development of renewable
energy infrastructure.
We currently have Power Purchase Agreements (‘PPAs’) in Spain, Greece
and the UK, and have agreed a new PPA in the UK which will go live later
in 2022. PPAs trade at a discount to current wholesale electricity prices
and provide us with more economic certainty against current volatile
wholesale electricity prices, as well as helping to create new capacity
within the markets.
Following our energy purchasing hierarchy approach, we prioritise energy
efficient practices before considering on-site generation of renewable
energy, PPAs and Renewable Electricity Certificates (‘RECs’). Whilst on-site
generation of renewable electricity currently accounts for less than 1% of
our overall renewable energy consumption due to space constraints on
our infrastructure, we continue to trial innovative solutions, such as the
micro wind towers in Germany. The remainder of our renewable energy
consumption is split between PPAs 5% and RECs 94%. Most RECs are
bundled either via green electricity tariffs or provided by our electricity
suppliers, however a small amount are considered ‘unbundled’ for
example, to cover our consumption on third party sites. The purchase of
unbundled RECs is our least favoured approach, however it is necessary in
certain circumstances. For example, where we are tenants and electricity
is procured by a landlord, or where our preferred options are not available
due to limitations in a particular market. The incremental cost of RECs
(or
{
their equivalent) is small in the context of our overall energy spend.
This year, we spent approximately €846 million on purchasing electricity.
This is a year-on-year increase of 11% and approximately three quarters
of our electricity we directly purchase is forward hedged for FY23. The
increases in commodity prices (oil, gas and CO
2
) as a result of a strong
post COVID-19 economic recovery were the main drivers for our energy
costs. This year, 77% of our electricity purchased was from renewable
sources (FY21: 55%).
Read more about our renewable electricity purchasing
strategy here –
vodafone.com/renewables
Working with our partners to reduce Scope 3 emissions
Scope 3 emissions are indirect GHG emissions which we cannot control
but may be able to influence. As part of our Science-Based Target, we
{
have
committed to halve our Scope 3 carbon emissions by 2030 (against a
2020 baseline) and fully abate them by 2040, as part of
{
our ‘net
{
zero’
target. The main sources of Scope 3 emissions are investments (joint
ventures and associates), purchased goods and services, and the use
{
of
sold products. This year, our estimated Scope 3 emissions were 9.2 million
tonnes of CO
2
e. We have worked with the Carbon Trust to analyse our
Scope 3 emissions and prioritise reduction opportunities.
In 2020, we introduced a 20% weighting for environmental and
social
{
criteria in our supplier evaluation RFQ processes. The assessment
awards positive scoring for suppliers that have set (or are willing to set) a
Science-Based Target. In addition, suppliers which offer product-specific
CO
2
data and pathways for reduction over the contract period are
positively scored.
Our supplier performance management programme also covers
environmental factors, and suppliers’ GHG performance is one of the
factors evaluated in our annual assessment process. We ask selected
suppliers to provide details of their GHG emissions and management
programmes through CDP. This year, 90% of those suppliers responded,
with 88% reporting that they had set a target for GHG emissions.
This year we introduced a new CO
2
analytics dashboard allowing our
supply chain teams to view and track progress against our reduction
targets. The dashboard tracks the impact of purchased products and
services on our targets. It also helps our procurement team to identify
suppliers, markets and categories which contribute higher emissions
and
{
helps us subsequently work on efficiencies with our partners.
43
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
FY22 carbon enablement overview
GHG emission saving
(million tonnes CO
2
e)
Smart meters
1.6
Fleet management
10.7
Healthcare
2.6
Other (e.g. cloud/street lighting/EV charging)
0.6
Total 15.6
Enablement ratio
2022
2021
Total GHG enablement saving
(Million tonnes of CO
2
e)
15.6
7.1
Scope 1 and Scope 2 emissions
(Million tonnes of CO
2
e)
1.09
1.42
Enablement ratio
14.3
5.0
Vodafone Business is increasingly integrating environmental credentials
into sales and bidding processes. For example, to demonstrate the savings
potential for connected systems we have developed a carbon calculator
tool which provides customers with a view of potential carbon savings.
This year we established a Vodafone Business Sustainability Steering
Group. This group is working to raise awareness, to include sustainability
in
{
our external marketing content and to educate and train sales teams
across Vodafone Business on sustainability and how to engage customers
and position Vodafone as the partner of choice for a sustainable future.
Reducing waste
Goal:
To reuse, resell or recycle 100% of our network waste by 2025
Aside from carbon emissions, electronic waste is the largest material
environmental issue for our business. We consistently seek to manage our
own impact in a responsible manner and also support our customers with
their efforts.
Our global policy on waste management prioritises the reuse, resale or
recycling of unwanted equipment. We aim to keep resources in use for as
long as possible, extracting the maximum value from equipment while in
use and then recovering and reusing materials responsibly.
We implement resource efficiency and waste disposal management
programmes in all our markets to minimise environmental impacts
from
{
network waste and IT equipment waste. This year, we generated an
estimated 8,800 tonnes of waste (which includes hazardous waste) and
we recovered and recycled 95%. Globally, 98.6% of our network waste
was sent for reuse and recycling (excluding hazardous waste).
To support the delivery of our 2025 goal to reuse, resell or recycle 100%
of our network waste, we have launched an internal asset marketplace,
a
{
business-to-business solution within Vodafone that allows us to re-sell
and re-purpose excess stock or large decommissioned electrical items
like masts and antennae. This year, we estimate
{
that we have saved
€10.8
{
million of spend and avoided over 2,500 tonnes of CO
2
e. We are
assessing the possibility of expanding the solution to partner markets and
other operators.
Network waste management (excluding
ha
]
ardous
{
waste)
2022
2021
Reused 9%
20%
Recycled
90%
79%
Landfilled
1%
1%
Total network waste (metric tonnes)
8,483
6,307
Looking forward, we are planning to expand the categories of Scope 3
data we report. We are moving towards a hybrid model for Scope 3 data
collection, which will improve the accuracy of carbon emissions data and
help identify areas to improve efficiency, whilst ensuring we successfully
measure our progress against our targets. Our new approach will also
incorporate product-specific data and use data submitted to the Carbon
Disclosure Project (‘CDP’) by our suppliers.
In addition to suppliers, we also work with our joint ventures and associates,
which represent the most significant proportion of our Scope 3 emissions.
Notable actions from last year include:
–
In the Netherlands, VodafoneZiggo issued its first sustainability
bonds
{
worth €2.1 billion and had its Science-Based Target approved
by
{
SBTi; and
–
In Australia, TPG Telecom launched a new sustainability strategy, which
includes a commitment to set a Science-Based Target.
Another significant source of our Scope 3 emissions is the use of sold
products (e.g. charging devices). As countries decarbonise their electricity
grids, these associated emissions will also reduce.
Enabling our customers to reduce their emissions
Goal: To help our business customers reduce their own carbon
emissions by 350 million tonnes between 2020 and 2030
For Vodafone, our most important contribution to tackling climate change
is through enabling our customers (which include both businesses and
governments) to reduce their environmental footprint using our digital
technologies and services.
In alignment with the recent Intergovernmental Panel on Climate
Change
{
(‘IPCC’) report, digital technologies have significant potential to
contribute to de-carbonisation due to their ability to increase energy and
material efficiency
1
.
In 2020, we committed to helping our business customers reduce
their
{
own carbon emissions by a cumulative total of 350 million tonnes
globally over 10 years between 2020 and 2030.
Since setting this target, we estimate to have saved our customers
22.7
{
million tonnes of carbon emissions. Our IoT service offer, including
logistics and fleet management and smart metering, has been central in
delivering these savings so far.
Our enablement target is underpinned by a strong commercial rationale.
We believe our IoT and Digital for Green solutions represent three main
opportunities for customers:
1.
Increased efficiency and reduced wastage
. IoT enables
organisations to monitor operational processes, identify waste and
address the cause, an example being energy loss. This improves cost
efficiency, as well as carbon savings;
2.
To use IoT to deliver cost-efficiency.
Connectivity can allow
products and services to be automated and shared, reducing the
cost
{
and carbon impact. For example, shared distribution networks
and
{
vehicle sharing;
3.
Changing customer behaviour to promote long-term
sustainability.
IoT products can enable a direct connection to
each
{
customer allowing trends to be monitored, for example shifting
demands for public transport or energy.
We are continuing to work with the Carbon Trust to calculate the total
GHG emissions avoided as a consequence of our IoT technologies and
services. We estimate that 49% of our 150.1 million IoT connections
directly enabled customers to reduce their emissions in the past year.
During the year, we estimate to have enabled an avoidance of 15.6 million
tonnes CO
2
e, which is over 14 times the emissions generated from our
own operations (Scope 1 and 2).
Note:
1. IPCC,
2022.
Strategic report
Governance
Financials
Other information
44
Vodafone Group Plc
Annual Report 2022
Purpose (continued)
We believe in the power of connectivity and digital
services to strengthen the resilience of economies.
Through our mobile and fixed networks, data flows
at
b
speed, connecting people and communities.
As the last two years have demonstrated, connectivity and digital
services
{
can be a lifeline allowing people to work, learn, stay in touch with
friends and family, access healthcare and more. Currently, we have over
351 million customers connected to our next-generation mobile and
fixed networks.
This year, informed by our social contract, we continue to focus
the
{
Digital
{
Society pillar towards digitalising critical sectors. We have
specifically focused on small and medium-sized enterprises (‘SMEs’),
agriculture and health. We have also continued to invest in our network
infrastructure and coverage.
Aligned with our Planet pillar, our products and services enable customers
to become more efficient and in many cases reduce their emissions.
Read more about our carbon enablement approach
on page 43
Supporting small businesses
Goal: Support seven million users to digitalise using V-Hub by 2025
SMEs are a critical part of the economy and provide opportunities for
socio-economic participation and social mobility for women, young
people, and ethnic minorities.
Through Vodafone Business, we provide products and services which
are
{
specifically tailored for SME and small-office home-office (‘SOHO’)
businesses, helping guide them through technology choices and
improving their digital readiness. These segments also represent a
significant commercial opportunity for Vodafone. We estimate to have
over six million SME customers and expect the overall market to grow a
combined €6 billion over three years.
1
To better support SMEs across Europe, Vodafone Business launched
V-Hub in 2020. This free service provides access to online information and
connects SMEs with experts who provide one-to-one advice and support
on developing business in an ever-changing digital world.
As of the end of March 2022, V-Hub has been used by over 3.6 million
unique users across 12 European countries, as well as South Africa. Since
its launch V-Hub has achieved a strong return visitor rate of 23% and has
hosted over 8,500 conversations between SMEs and Vodafone experts.
We have set a target to support seven million users digitalise their
business through V-Hub by 2025. Over the next year we plan to improve
our V-Hub offer. For example, SMEs will be able to sign-up as ‘V-Hub
members’ and access a secure private portal for ongoing personalised
advice and tailored content.
Beyond customers, we are working to support SMEs in our supply
chain.
{
This year, over 1,500 small businesses are Tier 1 suppliers. We also
offer
{
optional supply chain financing which allows suppliers to leverage
Vodafone’s credit position to access cheaper funding and liquidity. This
has no impact on Vodafone’s commercially negotiated payments terms.
In South Africa, Vodacom Financial Services has built a supplier portal
called VodaTrade, where small suppliers can connect with bigger business
partners. Currently, there are 88 SMEs registered on the VodaTrade portal,
which provides them access to procurement opportunities with seven
large retailers.
Digital Society
Building a circular economy
We recognise that to build a circular economy we need to tackle not only
our network waste, but also device waste.
To begin the shift towards a circular economy of devices, we are taking a
life-cycle management approach, which includes extending the lifespan
of devices through repair, refurbishment and resale. We estimate that
more than 50,000 tonnes of CO
2
e could potentially be avoided for every
million smartphones Vodafone receives via trade-in that are subsequently
refurbished and resold.
In May 2021, we launched a new Eco Rating labelling scheme jointly
with
{
other major European operators. This is a pan-industry initiative
to
{
help consumers identify and compare the most sustainable mobile
phones on the market, whilst also encouraging suppliers to reduce the
environmental impact of devices. Eco Rating evaluates the environmental
impact of the entire production process, transportation, use and disposal
of a handset, resulting in an overall score. The Eco Rating scheme was
initially launched in 24 European countries and has since been rolled
out
{
in several countries in Latin America and by Vodacom in South Africa.
More than 150 mobile phones from 15 manufacturers are now assessed
by the Eco Rating initiative, nearly doubling the range of devices rated
at
{
launch.
Find out more about Eco Rating at
ecoratingdevices.com
In addition, in November 2021 we launched our ‘Bring Back Friday’
initiative to coincide with Black Friday. Across several markets including
Italy, Spain, Czech Republic and Greece, we encouraged customers to
return old devices to be recycled or refurbished and in return customers
received credit towards a purchase.
This year, we announced a new initiative to extend the life of new mobile
phones and encourage customers to trade in or recycle their old devices,
in partnership with Recommerce. Starting in European markets from
Spring 2022, our customers will be able to access a comprehensive and
convenient suite of services, including insurance, support and repairs for
their device. We will also launch a new digital platform enabling customers
to agree trade-in options for their existing phones. As well as encouraging
customers to return their phones, we will begin to offer a wider range of
high-quality, competitively priced refurbished smartphones at retail.
We are part of the Circular Electronics Partnership to drive industry
action
{
on circularity, bringing together leaders across the value chain
from manufacturing, reverse logistics, material recovery, to e-waste
management. This year the partnership has extended to 22 members,
working to scale solutions across industries.
Beyond what we can directly and indirectly influence we also support
societal change to more circular economy models. Digital and connected
solutions are an essential part of the solution towards lower resource
use
{
and improved reuse and recycling. For example, through enabling
material tracing or shifting from product-based business models to
service-based ones.
We strive to refurbish and reuse fixed-line equipment multiple times,
with
{
significant associated environmental and cost savings. We are also
eliminating all unnecessary plastics and other disposable single-use items
where there are lower impact alternatives across all our retail stores and
offices. From October 2021, we committed to roll out SIMs made out of
recycled plastic and half the size of a traditional SIM card holder. The
global roll out of the new SIMs will result in a 340 tonne reduction in
plastic per year, an equivalent to 1,760 tonnes of CO
2
e.
Engaging our people
More than 13,000 colleagues are currently members of our
‘#RedLovesGreen’ employee engagement initiative, which aims to
raise
{
awareness of the individual actions that employees can take to
reduce energy and other resource uses.
Note:
1.
Vodafone Business investor day, 2021.
45
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Digitalising agriculture
Agriculture is a pressing issue for society with the need for sustainable
and
{
affordable sources of food increasing. According to the Food and
Agriculture Organization, by 2050, the world will need to produce 50%
more food than current levels
1
. There is also a growing need to address
the environmental impact of agriculture. In Europe, agriculture accounts
for 10% of the EU’s total greenhouse gas emissions and over 40% of EU
land use
2
, in many cases leading to habitat loss and deforestation.
Through Vodafone Business, we are working with partners across the
value chain, including equipment manufacturers, suppliers and research
institutes, to introduce new applications and IoT platforms – helping
to
{
increase the amount of information farmers have available to them
and
{
enabling farms to efficiently operate and use resources. This allows
a
{
farmer to reduce the use of pesticides and fertiliser (which reduces
emissions), water use and resource consumption, as well as improving
the
{
protection of biodiversity and increasing yields.
Through Vodacom’s subsidiary, Mezzanine we have developed MyFarmWeb
to support larger commercial farms. Over 8,000 farms across four continents
use MyFarmWeb.
The cloud-based web platform allows producers to capture key
agriculture data (physical, chemical, and microbial soil analysis, pest
presence, satellite and remote sensing information along with data
from
{
various internet connected farming sensors) into a system that
aggregates and calibrates the information to assist in decision-making.
This helps to increase yields whilst not damaging the environment
and
{
reduce losses – all of which contribute to carbon savings along
the
{
production process. MyFarmWeb also provides farmers with a
platform that will allow them to use more productive and sustainable farm
operation practices, which is becoming increasingly important to comply
with the changing legislation to qualify for subsidy funding in the future.
This year, we expanded MyFarmWeb to Europe, accelerating
digitalisation
{
across the agricultural industry and collaborating with
the
{
farming community to meet targets set out in the EU Farm to Fork
strategy. Five
{
pilot farms in Europe will provide the platform with valuable
region-specific data points to calibrate the MyFarmWeb data to local
farming practices and regional regulations. The five selected farms are:
Dairygold in Ireland, Llusar and Grima both based in Spain, Laporta in
Italy
{
and Agrar-Betriebsgemeinschaft Leine-Solling GbR in Germany.
Mezzanine is also helping to digitalise agriculture in Sub-Saharan Africa
through its Connected Farmer platform. This gives smallholder farmers
access to agricultural inputs, financial services like insurance, logistics
suppliers, buyers and markets and knowledge. With around 2.9 million
smallholder farmers registered, the platform allows an ecosystem of
partners to register, profile, communicate and transact (using M-Pesa in
some cases) with each other.
This year, Mezzanine supported both the Department of Agriculture, Land
Reform, and Rural Development (‘DALRRD’) and also the Solidarity Fund
in South Africa to disburse subsidies to smallholder farmers across the
country. Mezzanine also distributed vouchers to DALRRD registered
farmers breeding small or large livestock or those growing vegetables
and
{
grain on behalf of the Solidarity Fund. In total, both programmes
issued over 260,000 vouchers to smallholder farmers in South Africa
worth a
{
combined value of €27 million. Women and youth were focus
demographics for the programmes, with the Solidarity Fund reporting
that
{
more than 65% of the beneficiaries were women. More than 350
suppliers participated in the voucher programmes, resulting in more
{
than
1,000 outlets redeeming farmers’ vouchers, receiving a welcome cash
injection from outside the community.
Mezzanine has also supported Safaricom and the Kenyan Ministry of
Agriculture, Land, and Fisheries (‘MoALF’) with the rollout of vouchers
to
{
smallholder farmers in around 40 counties throughout Kenya.
These
{
vouchers can be used to buy inputs to support maize, rice,
and
{
coffee cultivation.
Find out more about digitalising agriculture at
vodafone.com/agriculture-digitalisation
Revolutionising healthcare
The COVID-19 pandemic highlighted the importance of digital
connectivity to deliver critical services, in particular healthcare. During
the
{
last two years, healthcare resources across the world have become
stretched and significant backlogs of diagnostic tests and elective
procedures have grown for non-COVID related conditions.
Even before this, many countries were facing a health crisis, with
increasing demands for healthcare from ageing populations and
decreasing capacity to provide treatment due to staff shortages and
supply constraints.
We believe that technology can be used to make the delivery of
healthcare services more efficient for providers and more inclusive for
patients. A recent survey by the Vodafone Institute revealed that 92% of
European citizens think the health sector needs urgent support through
the EU’s Recovery and Resilience Facility (‘RRF’)
3
.
Against this backdrop, in October 2021, we launched the Vodafone
Centre for Health in partnership with Deloitte, a new strategic alliance
to
{
accelerate the adoption of connected healthcare. This virtual centre
brings together our connected health solutions with Deloitte’s healthcare
consulting experience to enable many more people to access healthcare.
Working together, we are committed to using our networks and
capabilities to improve access and quality of care worldwide, utilising
our
{
experience of developing new technologies like 5G, edge computing
and artificial intelligence to make healthcare more accessible.
In addition, we have continued to deliver other digital healthcare
solutions
{
during the last year, developing 5G technology to enable
remote procedures and surgeries with our partners in Europe. These
solutions could deliver improvements to the training of doctors and
nurses and enable more procedures, removing the need for specialists
to
{
travel between hospitals. For example:
–
We are working with Proximie and Cardiff University Hospital in the UK
to pilot 5G virtual surgery. This technology allows healthcare experts
to
{
virtually ’scrub-in’, record and interact with operating rooms across
the world to help accelerate and improve workforce training and more
efficient delivery of surgical care, at scale; and
–
Vodafone Italy in partnership with Artiness conducted a clinical trial
at
{
IRCCS San Raffaele hospital in Milan to perform intrusive heart surgery
using a remote proctoring system. Proctoring is the support provided
to doctors by experts from the medical device companies, who guide
{
them
in the correct implant of medical devices during surgical
{
procedures.
This solution means proctors can supervise more procedures every day
without needing to travel to each hospital.
Notes:
1.
Food and Agriculture Organisation, 2017.
2. Eurostat,
2021.
3.
Vodafone Institute for Society and Communications, 2021.
Strategic report
Governance
Financials
Other information
46
Vodafone Group Plc
Annual Report 2022
Purpose (continued)
Connectivity:
We want
everyone – whoever they
are and wherever they live –
to have access to reliable
and affordable internet.
Digital innovations:
We will
build digital innovations such
as IoT solutions and digital
platforms like M-Pesa to
contribute to the sustainable
development across a
range
{
of sectors including
manufacturing, transport,
health, agriculture, education
and energy.
{
Partnerships:
We are
building new models
of cooperation between
business, governments,
international organisations
and civil society to deliver
process and scale, for example
to connect the unconnected.
Through connectivity infrastructure, digital innovations and
partnerships, we deliver impact across many of the SDGs.
We enable inclusive and sustainable digital societies
Vodafone is committed to accelerating connectivity and
digitalisation in order to meet the SDGs by 2030. We have
identified two priority SDGs (SDG 9 build resilient infrastructure and
innovation, and SDG 17 strengthen the means of implementation
and partnerships for sustainable development) that will enable us
and our partners to find lasting solutions to social, economic and
environmental challenges and thereby accelerate the delivery of
many other SDGs.
The UN Sustainable Development Goals (
ȁ
SDGs’)
provide a blueprint for human progress and a clear
call to action for businesses to contribute to a
better
b
future.
The COVID-19 crisis continues to create huge challenges for society,
particularly in developing countries, and has led to a reversal of progress
on a number of SDGs. For example, we have seen the first rise in extreme
poverty in a generation, with around 120 million people pushed back
into
{
extreme poverty
1
. Furthermore, the UN estimates that COVID-19
has
{
wiped out 20 years of educational gains, with secondary school
completion rates at just 53% and this is predicted to decline
1
.
Digital technology will be essential in reducing these impacts, and help
progress towards delivering the SDGs as society builds back better. We
are
{
committed to playing our role and believe we can increase the speed
and scale of delivery across a wide number of SDGs through leveraging
our technology and services, and through partnering with others.
Simultaneously, we can drive significant growth. For example, our M-Pesa
mobile money platform, designed to enable financial inclusion, has
52.4
{
million active customers. Excluding Safaricom, M-Pesa generated
revenue this year of €336 million.
Note:
1. UN,
2021.
We contribute to the
{
Sustainable Development Goals
UN Young SDG Innovators
This year, a small group of Vodafone colleagues participated in the
2021
{
UN Young SDG Innovators programme, run by the United Nations
Global Compact. The programme helps to accelerate business innovation
towards the SDGs. The team worked on a concept to tackle inequality
(SDG 10) by addressing the digital divide through big data and was
selected to showcase its idea at the 2021 SDG Innovators Summit.
Examples of our projects and initiatives supporting
the SDG’s over the last year
Read more about our contribution to the SDGs:
vodafone.com/sdgs
Click here to read more about the
{
launch of VodaPay
vodafone.com/vodapay-launch
Click here to read more on how our #ChangeTheFace
Alliance is driving increase participation and equal
opportunities for leadership in our industry
vodafone.com/change-the-face-alliance
Click here to read more about self-powered mobile masts
providing sustainable solutions for rural communities
vodafone.com/self-powered-mobile-masts
Click here to read more about Greece’s first
p
green
{
island
q
vodafone.com/first-green-island
Click here to read more about the new pan-industry
Eco
{
Rating scheme launched for mobile phones
vodafone.com/eco-rating
Scan to watch how our
{
Mum
{
& Baby service in
Mozambique is helping mothers to
{
access
healthcare expertise
Scan to watch how Vodafone is
{
bringing digital
learning to students, teachers and schools
worldwide through
{
Connected Education and
other
{
programmes
No poverty
Gender equality
Affordable and clean energy
Sustainable cities and communities
Responsible consumption
Good health and wellbeing
Quality education
47
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
To underpin the delivery of our purpose, we ensure that
we operate in a responsible way. Acting ethically, lawfully
and with integrity is critical to our long-term success.
Our Code of Conduct sets out what we expect from every single person
working for Vodafone, regardless of location. We also expect our suppliers
and business partners to uphold the same standards and to abide by our
Code of Ethical Purchasing.
Click here to read our Code of Conduct:
vodafone.com/code-of-conduct
Our ‘Doing What’s Right’ training and communication programme is key
to embedding a shared understanding of the Code of Conduct across
Vodafone. Throughout the year, the Doing What’s Right communication
programme promoted different areas of our Code of Conduct, including
Speak Up, anti-bribery, privacy, competition law, security, and health
and
{
safety. Training on our Code of Conduct is included in our standard
induction process for new employees. We expect every employee to
complete refresher training when assigned, and this is typically every two
years. Of those employees assigned induction or refresher Doing What’s
Right training during the period, 89% had completed the training as at
31
{
March 2022.
During the year, we rolled out a translated version of our Code of
Conduct
{
module in 10 non-English-speaking markets. We also produced
and launched new anti-bribery training globally and introduced a new
security
{
module to English-speaking markets; a translated version
will
{
follow in the
{
next year. The refreshed modules followed the same
approach taken in
{
the Code of Conduct module by engaging learners
with interactive video-based scenarios aimed at encouraging the right
behaviours. The new training materials were positively received and
were
{
consistently rated with five stars in the Vodafone learning platform.
We also strive to make compliance easy for our employees and
continue
{
to improve our digital Code of Conduct and Global Policy
portal,
{
the internal platform where employees can find information
about
{
our policies and procedures. We have seen a significant increase
in
{
traffic on both sites, with a 55% increase in views of the Policy Portal
and a 45% increase in views of the digital Code of Conduct, showing
that
{
our employees are engaging with our policies.
Our Code of Conduct is well understood throughout Vodafone. In our
January 2021 Spirit Beat employee survey, 96% of respondents agreed
with the
{
statement ‘Our team lives by the Code of Conduct’.
Speak Up
Everyone who works for or on behalf of Vodafone has a responsibility to
report any behaviour at work that may be unlawful or criminal, or could
amount to an abuse of our policies, systems or processes and therefore
a
{
breach of our Code of Conduct. Employees are able to raise concerns
with a line manager, with a colleague from human resources or through
our confidential third-party hotline, Speak Up, accessible online or
by
{
telephone.
Speak Up operates under a non-retaliatory policy, meaning that everyone
who raises a concern in good faith is treated fairly, with no negative
consequences for their employment with Vodafone, regardless of the
outcome of any subsequent investigation.
All Speak Up reports are confidentially investigated by local specialist
teams, with a senior team in place to triage reports. Each grievance is
formally and robustly investigated and is monitored to verify that any
corrective action plan or remediation has been conducted. Our Group
Risk and Compliance Committee reviews the effectiveness of the Speak
Up process and trends twice a year, and the Audit and Risk Committee
receives an annual update, with additional ad hoc reviews also carried out
where appropriate.
Our employees trust our Speak Up process, as evidenced by our
January
{
2021 Spirit Beat survey, with 87% of respondents agreeing that
they believe appropriate action would be taken as a result of using the
process. We also track the proportion of ‘named’ versus ‘anonymous’
reports as a higher number of named reports suggests higher levels
of
{
trust in the Speak Up process. During the year, 64% (FY21: 64%)
of
{
reports were ‘named’ and this was higher than available
industry
{
benchmarks.
This year, 642 (FY21: 623) separate concerns were reported using
Speak
{
Up. Speak Up reports could relate to matters of unlawful
behaviour
{
or matters of integrity, such as bribery, fraud, price fixing, a
conflict of interest, or a breach of data privacy. Reports could also relate
to
{
people issues such as discrimination, bullying or harassment, danger
to
{
the health and safety of employees or the public, or potential abuses
of
{
human rights.
If we decide to proceed with an investigation, a qualified expert will
investigate, keeping the person who raised the concern informed
throughout the process. Where reports made to Speak Up require
remedial action, this could include consequences at the individual
level,
{
or changes to internal processes and procedures.
Speak Up topics raised during the year
Topic
1
Speak Up
reports
Requiring
remedial action
People issues
2
55%
24%
Integrity
33%
39%
Other 11%
84%
Health and safety
1%
33%
Notes:
1.
There were no reports relating to modern slavery concerns reported during the period
(FY21:
{
zero reports).
2.
Diversity & Inclusion topics accounted for 4% of the People issues reported during the year.
Speak Up is also made available to our suppliers and is communicated
through our Code of Ethical Purchasing. For suppliers that decide
to
{
maintain their own grievance mechanisms, we require that they
inform
{
us
{
of any grievances raised relating to work done on behalf of
Vodafone
{
directly.
Protecting data
Millions of people communicate and share
information over our networks, enabling them to
connect, innovate and prosper. Customers trust us
with their data and maintaining this trust is critical.
Data privacy
We believe that everyone has a right to privacy wherever they live in
the
{
world, and our commitment to our customers’ privacy goes beyond
legal compliance. As a result, our privacy programme applies globally,
irrespective of whether there are local data protection or privacy laws.
Our privacy management policy is based on the European Union General
Data Protection Regulation (‘GDPR’) and this is applied across Vodafone
markets both inside and outside the European Economic Area. Our
privacy management policy establishes a framework within which local
data protection and privacy laws are respected and sets a baseline for
those markets where there are no equivalent legal requirements.
Responsible business
Responsible business
Strategic report
Governance
Financials
Other information
48
Vodafone Group Plc
Annual Report 2022
Privacy risks
As data volumes continue to grow and regulatory and customer scrutiny
increases, it is important to be clear on the privacy risks we face, as well as
how our policies and programmes can mitigate these risks. We categorise
data privacy risk into three main areas:
–
Collection:
collection of personal data without permissions or
excessive collection of data;
–
Access & use:
use of personal data for unauthorised purposes,
excessive data retention or poor data quality; and
–
Sharing:
unauthorised disclosure of personal data, including supplier
non-compliance with the law or our own policies.
To help us identify and manage evolving risks, we constantly evaluate
our
{
business strategy, new technologies, products and services as well
as
{
government policies and regulation.
Privacy principles
Our privacy programme governs how we collect, use, and manage our
customers’ personal data to ensure we respect the confidentiality of their
communications and any choices that they have made regarding the use
of their data. Our privacy programme is based on the following principles:
accountability; privacy by design; fairness and lawfulness; openness and
honesty; choice and access; security safeguards; and balance.
Click to read more about our privacy principles and how
they
b
guide the way our products are designed and built:
vodafone.com/privacy
Using customer data
We want to enable our customers to get the most out of our products
and
{
services. To provide these services, we need to use our customers’
personal information. We are committed to protecting our customers’
data, using it for a stated and specific purpose, and we are always open
about what customer data we collect, and why we collect it.
Click to read more about uses of customer data:
investors.vodafone.com/sasb
Each local market publishes a Privacy Statement to provide clear,
transparent and relevant information on how we collect and use
personal
{
data, what choices are available regarding its use and how
customers can exercise their rights. Our product specific privacy notices
include details relating to a particular product. These statements and
notices are available to customers online, in the MyVodafone app and
in
{
our retail
{
stores.
Our businesses provide our customers with access to their data
through
{
online and physical channels. These channels can be used
also
{
to request deletion of data that is no longer necessary, or for
correction of outdated or incorrect data, or for data portability. Our
customer privacy statements and other customer facing documents
provide comprehensive information on how these rights can be
exercised
{
and how to raise complaints or contact the relevant data
protection authority. Our frontline retail and customer support staff
are
{
trained to respond to the customers’ requests.
Our state-of-art, multi-channel permission management approach was
deployed across our channels (MyVodafone app, website, call centres
and
{
retail stores) in 2018. This approach allows our customers to control
how we use their data for marketing and other purposes at any time
and
{
the permissions are synchronised across our channels. For example,
customers can:
–
Opt-in for processing of special categories of data;
–
Choose what data we collect through the MyVodafone app and how it
is used;
–
Opt-out from marketing across different channels (call, SMS,
notifications), or opt-in to the use of their communications metadata
for marketing purposes or for receiving third-party marketing
messages; and
–
Opt-out from the use of anonymised network and location data
(‘Vodafone Analytics’).
Click to read more about our privacy policies:
vodafone.com/privacy
Operating model
We have an experienced team of privacy specialists dedicated to ensuring
compliance with data protection laws and our policies in the countries
where we operate.
We apply a process-based approach to managing privacy risks across
the
{
data life cycle and teams from across Vodafone ensure end-to-end
coverage. Dedicated security teams ensure appropriate technical and
organisational information security measures are applied to protect
personal data against unauthorised access, disclosure, loss or use during
transit and at rest.
Read more about cyber security
on pages 49 to 51 and 60
All products, services and processes are subject to privacy impact
assessments as part of their development and throughout their life
cycle.
{
We maintain personal data processing records, supplier privacy
compliance, data breach management and individual rights processes,
as
{
well as internal and international data transfer compliance frameworks,
and training and awareness programmes.
Our teams monitor and influence regulatory and industry developments
and work to build and maintain relationships with local data protection
authorities and other key stakeholders.
Our privacy control frameworks are subject to continuous risk-based
improvements. In addition to introducing updates to our global privacy
controls, we also require every employee, and where possible contractors,
to complete Doing What’s Right privacy training within six weeks of joining
and then every two years. We also have targeted training for high-risk
roles which is aimed at teams with a key role in personal data processing.
With this approach we aim to achieve a 90% completion rate on both
types of training across all target groups across our global footprint. In
FY22, 91% of assigned employees completed Doing What’s Right
privacy
{
training.
The effectiveness of control implementation is subject to quarterly
reporting, annual evidence-based testing by the privacy teams, as well as
internal audit. Control implementation is also reviewed by local market
CEOs, the Group Risk and Compliance Committee and the Audit and
Risk
{
Committee. Any findings are subject to remedial actions by the
responsible control operator, and completion is monitored.
Governance
The General Counsel and Company Secretary, a member of the Executive
Committee, oversees the global privacy programme. The Group Privacy
Officer, reporting to the General Counsel, is responsible for managing
and
{
overseeing the privacy programme on a day-to-day basis across
the
{
markets and provides regular status reports to the General Counsel and
Company Secretary and an annual update to the Audit and Risk Committee.
Responsible business (continued)
We always seek to respect and protect the right to privacy, including
our
{
customers’ lawful rights to hold and express opinions and share
information and ideas without interference. At the same time, as a
licensed national operator, we are obliged to comply with lawful orders
from national authorities and the judiciary, including law enforcement.
Scan or click to watch our privacy experts summarise
our
b
approach to data privacy:
investors.vodafone.com/videos
49
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Whilst each employee is responsible for protecting personal data they
are
{
trusted with, accountability for compliance sits with each operating
company. A member of the local executive committee oversees the local
implementation of our privacy programme. Each operating company also
has a dedicated privacy officer, privacy legal counsel and other privacy
specialists. Local privacy officers report to the Group Privacy Officer
throughout the year.
The Privacy Leadership team approves new standards and guidelines
and
{
monitors the implementation of global privacy plans. Operating
companies also maintain privacy steering committees that bring
together
{
privacy and security teams and senior management from
relevant business functions.
Privacy incidents
We have a strong culture of data privacy and our assurance and
monitoring activities are designed to identify potential issues before
they
{
materialise. However, during the financial year, Vodafone was
fined
{
€2
{
million (FY21: €20 million) for data privacy issues, primarily
relating to telesales and customer authentication practices in Spain.
In response to the incidents in Spain, we have established a dedicated
taskforce that reports directly to the Vodafone Spain Executive
Committee. The taskforce also contributed to a new industry code of
conduct on telesales published in July 2021. Fines relating to telesales
arose as some of our third-party marketing agencies had conducted
direct marketing activities towards people who had opted-out. These
activities were in violation of existing supplier agreements. In response
to
{
these incidents, our rules on telesales have been reviewed and
compliance with these rules is subject to increased assurance and
monitoring. Where necessary, improved controls have been introduced
to
{
monitor and enforce suppliers’ compliance. Such measures include,
for
{
example, the routing of third-party telesales through Vodafone’s
systems which ensures that calls to opted-out customers are detected
and blocked, verification to ensure that commission is only paid for
authorised calls, strict enforcement of contractual penalties for non-
compliance, and the discontinuation of contracts with several suppliers.
Third parties are increasingly using mobile devices to verify the identity
of
{
their customers. For example, banks or websites may issue one
time
{
access codes sent via SMS to verify an individual’s identity. As a
result, there has been an increase in attackers attempting to exploit
telecommunication authentication processes for fraudulent purposes.
One method involves attackers using social engineering to access
customers’ telecommunications accounts with the aim of swapping
SIMs
{
to new devices or setting up call forwarding.
In response to these trends, the Spanish data protection regulator has
issued penalties to the main telecommunications companies operating
in
{
the country, including Vodafone, for not having stronger levels of
authentication processes to prevent such fraudulent activities from
occurring. We have been actively collaborating with other local
telecommunications operators, the banking sector, law enforcement
authorities and the local data protection regulator through a cross-
industry taskforce, with the aim of resolving fraudulent customer
authentication practices. We have also implemented new technology
tools to minimise the risk of further fraudulent activities in Spain, updated
our global security policies and are in the process of implementing new
tools in our markets.
In addition to the fines in Spain, our businesses in Hungary, Romania,
Ireland and Turkey received immaterial fines for data privacy issues. These
fines arose
{
as a result of a delayed response to a subject access request,
direct
{
marketing towards people who had opted-out of being contacted,
and an issue relating to notifying customers about how their personal
data was processed. These cases were isolated incidents and we have
implemented additional controls, such as stricter access restrictions and
increased monitoring in response.
For detail on how we respond to a data breach,
refer to the cyber
b
security section on page 51
Cyber security
Our role is to enable connectivity in society. As a provider of critical
national infrastructure and connectivity that is relied upon by millions of
customers, we prioritise cyber and information security across everything
we do. Our customers use Vodafone products and services because of
our next-generation connectivity, but also because they trust that their
information is secure.
Cyber attacks are part of the technology landscape today and will be
in
{
the future. No organisation, government or person will ever be fully
immune to the effect of cyber attacks and the telecommunications
industry is faced with a unique set of risks as we provide connectivity
services and handle private communication data. Our approach to
managing cyber risk is based on international best practice, a good
understanding of the threat landscape and leverages our global scale.
Identification of vulnerabilities and risks
Cyber security is a principal risk. We understand that if not managed
effectively, there could be major customer, financial, reputation or
regulatory impacts. Risk and threat management are fundamental
to
{
maintaining the security of our services across every aspect of our
business. We separate cyber security risk into three main areas of risk:
–
External:
Attackers and criminals targeting our systems, networks,
or
{
people to conduct malicious attacks;
–
Insider:
Accidental leakage of information or malicious misuse of
access privileges by our employees; and
–
Supply chain:
A supplier is breached or used as a conduit to gain
access to our systems, data or people.
To help us identify and manage emerging and evolving risks,
we
{
constantly evaluate and challenge our business strategy, new
technologies, government policies and regulation, and cyber threats.
We
{
conduct regular reviews of the most significant security risks affecting
our business and develop strategies and policies to detect, prevent and
respond to them. Our cyber security strategy focuses on minimising the
risk of cyber incidents that affect our networks and services.
Understanding the threat landscape is key to managing cyber risk.
The
{
war in Ukraine has led to an increased cyber threat for organisations
across all industries. State-backed or state-supporting threat groups may
conduct attacks on companies to cause disruption, in retaliation against
sanctions or as a spillover from the conflict. In the telecoms sector,
espionage, disruption and destruction are likely objectives for threat
actors. We have taken a multi-step approach to managing the heightened
risk and we have:
–
Increased threat monitoring for specific threats or insight distributed by
security authorities;
–
Heightened internal monitoring to track indicators that are related to
the war and immediately escalated them for action and review; and
–
Bolstered specific areas of security and reinforced good practice,
including changes to make user compromise less likely, and ran an
awareness campaign led by the Chief Executive.
More broadly, ransomware remains a significant threat to all companies.
Threat actors are changing their tactics to include data extortion or
destruction without using malware. In these cases, the cyber criminals
compromise internal accounts and tools and then use these to perform
their criminal activities. User awareness and good security hygiene, such
as that required by Vodafone’s Cyber Code, are critical to managing
these
{
threats.
Scan or click to watch our cyber security experts
summarise our approach to cyber security:
investors.vodafone.com/videos
Strategic report
Governance
Financials
Other information
50
Vodafone Group Plc
Annual Report 2022
Responsible business (continued)
In December 2021, a new critical vulnerability in widely used log4j software
code was identified. This vulnerability could be used to steal data, introduce
malware or take over systems. The log4j software is used as a building
block within many applications and services, and as a result almost all
companies were impacted. Our response has included blocking over two
million attacks which were attempting to exploit this vulnerability, as well
as scanning and patching our own systems and those supplied to us by
third parties to rule out compromise and reduce the risk level.
Controls
Controls can prevent, detect or respond to risks. Most risks and threats are
prevented from occurring and most will be detected before they cause
harm and need a response. A small minority will need recovery actions.
We use a common global framework called the Cyber Security Baseline
and it is mandatory across the entire Group. The baseline is based on an
international standard and includes key security controls which significantly
reduce cyber security risk, by preventing, detecting or responding to events
and attacks. We have effectiveness targets for the key controls that are
monitored and reported to senior management on a monthly basis. Each
year, we review the framework in the light of changing threats and create
new or enhanced controls to counter these threats. During FY22, we
have
{
introduced new controls to strengthen protection against phishing
and ransomware, increased requirements for privileged access and
authentication, and defined stronger security controls in our agile
development lifecycle.
A dedicated assurance team reviews and validates the effectiveness of
our security controls, and our control environment is subject to regular
internal audit. The security of our global networks is also independently
tested every year to assure we are maintaining the highest standards and
our controls are operating effectively. We maintain independently audited
information security certifications, including ISO 27001, which cover our
global technology function and 15 local markets.
We do more than just comply with local requirements or certifications; we
actively contribute to consultations and debates on laws and regulations.
We support level playing fields across regions and seek harmonised
regulatory environments that provide strong security and societal benefits
at a reasonable cost.
Read more about our identi
ȣ
cation of cyber threat
as a principal risk on page 60
New technologies
We adopt new technologies to better serve our customers and gain
operational efficiency. For every technology programme, new or existing,
we follow our Security by Design process, evaluating suppliers’ hardware
and software, modelling threats and understanding the risks before
designing, implementing and testing the necessary security controls.
Every new mobile network generation has brought increased
performance and capability, along with new opportunities in security.
During the year, we began deploying 5G core networks alongside
our
{
5G
{
radio networks, often described as 5G Standalone; with
these
{
networks already live in the UK and Germany. As we roll out 5G
standalone, we have updated our security standards to implement the
latest 5G features in our core networks. We also test security in our radio
networks using independent testing companies.
Open RAN is a new way of building and managing Radio Access Network
(‘RAN’) components within telecommunication infrastructure. Instead of
purchasing all the components from one supplier, we rely on software to
implement many of these functions which are connected through open
interfaces. Over time, this will create a more competitive landscape for
telecoms equipment. We mitigate security risks by following our Security
by Design process, identifying and mitigating threats with secure design
and configuration. We also participate in the O-RAN Alliance and security
working groups to standardise and strengthen the industry approach.
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Business customers
We also provide cyber security support to our business customers
through Vodafone Business. Our products and services help our
business
{
customers of all sizes protect themselves from the evolving
cyber security threat landscape and adapt to a new model of security
necessitated by the adoption of hybrid working. Our portfolio of cyber
security solutions for businesses is available in 16 markets and has over
one million users. Our products and services leverage our global network
and partnerships, such as those with Accenture, Palo Alto Networks, Trend
Micro, and VMWare, to make enterprise-grade security services accessible
to organisations of any size.
For SOHO and SME customers our focus is on click-to-buy services
covering mobile, endpoint and network security. We are also expanding
our services to cover emerging challenges such as human risk mitigation,
risk assessment and certification.
For mid-market business customers, we offer a range of professional
and
{
managed services that provide support across the full spectrum of
an
{
organisation’s cyber security needs – assessing risk with vulnerability
assessments; penetration testing and cyber exposure diagnostics;
protecting the organisation with firewall management and phishing
awareness campaigns; through to full scale managed detection and
response, and breach response and forensics services.
For larger and multinational organisations, Vodafone Business offers a
range of network, endpoint and managed security solutions to enhance
mobile and fixed portfolios in this segment.
Operating model
We have implemented an operating model based on the leading industry
security standards published by the US National Institute of Standards and
Technology (‘NIST’). We have an international team of over 1,000 people
who are focused on constantly monitoring, protecting and defending
our
{
systems and our customers’ data. We also work with third-party
experts and consultants to maintain specialist skills and continue to follow
leading practice. Our scale means we benefit from global collaboration,
technology sharing, deep expertise and ultimately have greater visibility of
emerging threats. Although the cyber team leads on detect, respond and
recover, preventative and protective controls are embedded across all of
our technology and throughout the entire business.
51
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Every employee has responsibility for cyber security and must follow
the
{
Vodafone Cyber Code, be sensitive to threats and report suspicious
activity. Embedded in our Code of Conduct, the Cyber Code is the
cornerstone of how we expect all employees to behave when it comes to
best practice in cyber security. It consists of seven areas where employees
need to follow security good practice.
Our cyber security awareness programme is delivered digitally via our
internal social media platform, videos and webinars. In addition, we
perform regular phishing simulations across all markets and functions
to
{
raise awareness and train employees. Cyber security is included within
our Doing What’s Right training programme and our latest module was
launched to all English-speaking markets during the year, with translations
for other markets planned during FY23. Of those assigned the English
language training, 89% had completed it by 31 March 2022.
We continued to run incident simulation training for our local
markets
{
during the year. The simulations used a common platform
to
{
provide CEOs and their teams a realistic experience of managing a
cyber incident and exercising their responsibilities in accordance with
our
{
common approach.
Click to read more about Vodafone’s Cyber Code in our
Code of Conduct:
vodafone.com/code-of-conduct
Governance
The Chief Technology Officer is the Executive Committee member
responsible for managing the risks associated with cyber threats and
information security. The Cyber Security Director is responsible for
managing and overseeing the cyber security programme on a day-to-day
basis and reports to the Chief Technology Officer. Reporting to the Cyber
Security Director are the heads of the global cyber security functions and
markets or regions. The local cyber security leads are part of their local
management teams and responsible for the cyber agenda in their market
or region.
The Cyber Risk Council (‘CRC’) meets on a monthly basis, is attended
by
{
the leads from each market and function and is chaired by the Cyber
Security Director. The CRC approves policies and standards, monitors
cyber risk and threat and oversees key programmes. The CRC is part of a
wider governance structure which includes the Group Technology Audit
and Risk Committee and ultimately the Board’s Audit and Risk Committee.
Key risk indicators for our most important controls and our security
baseline are reported to senior management and the Executive
Committee on a monthly basis. This reporting provides a granular view of
progress and risk reduction. The reports also include detail on the threat
landscape, policy and risk updates, vulnerability and incident data, and
programme status.
Cyber threats and information security are a major area of focus for the
Board’s Audit and Risk Committee and detailed updates including threat
landscape, risk position and security programme progress are provided
at
{
least twice a year, most recently in March 2022. The Audit and Risk
Committee does deep dives into significant incidents, such as the security
incident in Portugal during the year.
Read more about the Audit and Risk Committee’s oversight
of
b
cyber security on pages 83 to 88
Cyber incidents
As a global connectivity provider, we are subject to cyber threats,
which
{
we work to identify, block and mitigate with our robust control
environment without any impact. Where a security incident occurs, we
have a consistent incident management framework and an experienced
team to manage our response. The focus of our incident responders is
always fast risk mitigation and customer security.
We actively engage with stakeholders, including academic institutions,
industry and government, in order to protect Vodafone, respond to cyber
threats and work together to share best practice. Given our expertise and
extensive experience, we also engage with a wide range of organisations
to help improve the understanding of cyber security thinking and practice,
and contribute to public policy, technical standards, information sharing
and analysis, risk assessment, and governance.
In the event of a cyber breach, disclosure is made in line with local
regulations and laws, and based on a risk assessment considering
customers, law enforcement, relevant authorities and our external auditor.
The European Union’s GDPR provides a framework for notifying customers
in the event there is a loss of customer data as a result of a data breach
and this framework is a baseline across all our markets.
Vodafone holds cyber liability and professional indemnity insurance
policies and these policies may cover the costs of an information security
breach, in whole or in part.
In February 2022, Vodafone Portugal experienced a network outage
that
{
was caused by a deliberate cyber attack that was intended to
cause
{
disruption. No malware or malicious software was installed,
and
{
the
{
attack method would be described as a ‘living off the land’
attack
{
because it did
{
not use any specialist tools. The attack relied
on
{
sophisticated social engineering, and a deep understanding of IT
systems and networks. Investigations revealed that no customer data
was
{
accessed or compromised. No other Vodafone markets experienced
any disruption from this incident.
The outage affected the data network in Portugal. The impact was loss of
some voice and data services, some TV services and enterprise and business
applications across the country, as well as international connections. Home
broadband and linear TV were unaffected by the
attack.
On detecting the
incident, we utilised our global incident management framework and
immediately took action to
{
identify, contain further risk and restore
services quickly. Mobile data services and interconnections with other
operators were resumed within eight hours of the attack, with other
services being recovered during the next 48 hours. The Vodafone
Portugal CEO immediately and proactively communicated with
customers, and the team used widespread online, social media and
press
{
information and articles to keep customers aware
{
of our recovery
progress. Our cyber security team is continuing the investigation of this
incident and working with local law enforcement and security agencies.
Vodafone classifies security incidents according to severity, measured
by
{
business and customer impact. The highest severity category
corresponds to a significant data breach or loss of service caused
by
{
the
{
incident. In the past financial year, the only such incident was
the
{
Vodafone Portugal incident discussed above. During the incident,
4.7
{
million mobile and one million fixed line customers were impacted,
with some customers having both services. While the network outage
was
{
significant, it was only classified as a severe network incident for
48
{
hours. The
{
direct costs of the incident are estimated in the range
of
{
€5
{
million and are financially immaterial in the context of Vodafone
Portugal’s operations and the wider Vodafone Group.
We also track incidents at our suppliers and third parties. The frequency
of
{
such incidents is increasing. We contractually require our suppliers to
report incidents and we manage these incidents as if they were internal.
In
{
the last financial year, one such supplier incident has been reported
to
{
the Luxembourg regulator due to its potential scope to impact the
entire telecommunications industry. The supplier in question manages
the netting of roaming charges between operators and reported a
cyber
{
incident in September 2021. There was a minor direct impact
on
{
Vodafone based on the investigation carried out by Vodafone
and
{
the
{
supplier.
Click to read more about how we manage risks from
technology disruptions in our SASB disclosure:
investors.vodafone.com/sasb
Strategic report
Governance
Financials
Other information
52
Vodafone Group Plc
Annual Report 2022
Responsible business (continued)
Protecting people
Wherever we operate, we have an opportunity to
contribute to the advancement of fundamental
rights
b
for our customers, colleagues and communities.
We are
b
also conscious of the risks associated with
our
b
operations and we work hard to mitigate negative
impacts, ensuring we keep people safe.
Health and safety
Keeping people safe is one of the most important responsibilities we
hold
{
as an employer. Our ongoing focus is to provide a safe working
environment for everyone working for and on behalf of Vodafone and
the
{
communities in which we operate. We want everyone working with
Vodafone to return home safely every day.
Our health and safety framework provides a consistent approach to safety
leadership, planning, performance monitoring, governance and assurance.
Our commitment to safety does not differentiate between employees,
contractors and suppliers, all of whom benefit from the same focus
on
{
preventing harm, both on worksites and when working or moving
between sites.
Health and safety risks
We continue to focus on our key health and safety risks, which account
for the majority of reported incidents and remain a focus area globally:
occupational road risk, falls from height, working with electricity, and
fibre
{
operations.
Road traffic incidents continue to be the primary cause of major injuries
and fatalities reported globally, accounting for 41% of all reported high
potential incidents within Vodafone during the year. As a result, we have
maintained a specific requirement to focus on road safety and driver
behaviour within our health and safety strategy and annual objectives.
In
{
addition, local market road risk controls are reviewed as part of our
internal assurance plans.
In recognition of our key risks, we have established the ‘Vodafone
Absolute Rules’. These rules focus on risks that present the greatest
potential for harm for anyone working for or on behalf of Vodafone. The
Absolute Rules are clear and underpinned by a zero tolerance approach
to unsafe behaviours in all of our businesses. The Absolute Rules must
be
{
followed by all Vodafone employees and contractors, as well as our
suppliers’ employees and contractors. In the January 2021 Spirit Beat
survey, 96% of employees agreed that the Absolute Rules are taken
seriously at Vodafone.
Leadership engagement
The importance of senior leadership and commitment to health and
safety remains key to our approach. Our senior leaders are actively
engaged, carrying out regular site tours throughout the year. Despite the
restrictions imposed by COVID-19, our senior leaders have continued to
maintain their visibility and engagement by carrying out tours virtually,
recognising the importance of connecting with teams and critical workers
as they continued to maintain our networks, work in our retail stores and
on customer sites.
Health and safety governance
Health and safety is managed through a global health and safety
framework, which includes the monitoring and assessing of risks, setting
targets, reviewing progress and reporting performance. Our global safety
framework is based on international standards for occupational health
and safety, is aligned to internationally recognised best practice, and
always meets or exceeds local requirements. In addition, some of our
local markets have chosen to undergo independent external certification
to ISO 45001, the international standard for occupational health and
safety; 49% of our business is externally certified to ISO 45001.
All incidents relating to key risks and breaches of the Vodafone
Absolute
{
Rules are reported and investigated in adherence with
timescales contained within our Incident Reporting Standard. We
ensure
{
that incidents are investigated in accordance with their severity,
and appropriate remedial actions and improvements are identified
and
{
implemented. We strongly believe in the importance of prevention,
however we also believe that every incident should be treated as an
opportunity for learning and improvement.
Health and safety is a high-risk policy and included within our risk and
compliance governance programme. Due to restrictions introduced as
a
{
consequence of the COVID-19 pandemic, in-country audits have not
been possible again this year. However, we have updated our risk control
matrix to help enhance the effectiveness of the assurance programme,
ensuring a single set of standards and mandatory controls that local
markets self-assess against. This self-assessment process has been
completed with independent oversight and quality review to ensure
consistency and effectiveness.
Employee engagement and consultation in arrangements for health and
safety is a foundation of our approach and all markets have Health and
Safety consultative committees that meet on a regular basis.
Training
We continue to include a health and safety module as part of our mandatory
‘Doing What’s Right’ training. The training module includes a
{
video from our
Chief Human Resources Officer demonstrating se
ni
or-level support for the
Vodafone Absolute Rules. Every employee must complete the training
within six weeks of joining and then typically every
{
two years. During
FY22, 90% of assigned employees working for Vodafone completed the
health and safety module. Contractors are required to complete separate
training relevant to their role and position.
Each local market is also responsible for delivering health and safety
training which supports the development of appropriate safety leadership
skills, behaviours and identification of health and safety risks. Additional
training is specific to an individual’s role and aligned to each market’s local
safety legislation.
Key performance indicators
We have a global set of key performance indicators as part of our safety
framework, which are reported monthly to the Executive Committee, and
bi-annually to the Board:
–
Number of fatalities;
–
Number of employee lost time incidents; and
–
Number of top safety risks, including breaches of our Absolute Rules.
After a thorough investigation, we record all fatal incidents related to
our
{
operations where we conclude that our controls were not operating
as effectively as required and may have prevented the incident from
occurring. We also consider circumstances where, if controls could have
reasonably been enhanced, the outcome could have been different. Each
fatality is presented for review at a Fatality Review Board chaired by the
Chief Human Resources Officer and supported by the Global Head of
Health and Safety. The presentation is led by the local market’s CEO.
We
{
also share any lessons learned from each fatality across the relevant
Group functions.
Any injury is one too many and any loss of life related to our operations
is
{
unacceptable. It is therefore with great regret that we record three
fatalities in the year that have been determined to be within Vodafone’s
control. In Vodacom Mozambique a road traffic collision between a Vodacom
subcontractor’s vehicle and a third-party vehicle resulted in the deaths of two
passengers in the third-party vehicle who were members of the public.
In
{
Vodafone Egypt an 18-metre mast collapsed during construction ca
rried
out by a Vodafone subcontractor and resulted in the death of one of the
subcontractors. In each case, a thorough investigation was overseen by
the respective local market CEO, who is responsible for ensuring that
the
{
causes of the incident are widely understood and that any necessary
corrective actions are implemented. These incidents further reinforce our
53
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
During the year, our focus has shifted to support Future Ready Vodafone,
ensuring our hybrid working plans are safe and effective, and mental
health and wellbeing is supported. We recognise that there will be a range
of perspectives towards the risks as we shift to the endemic phase and
the
{
need to ensure those at greatest health risk have the support and
protection they need. Going forward, we will continue to listen and adjust
as we embed hybrid working and the Future Ready Vodafone strategy.
Read more about our Future Ready Vodafone strategy
on page 22
We are confident that our flexible approach remains appropriate to ensure
the health, safety and wellbeing of our people and suppliers who work
with us, however we will continue to assess and monitor the risks and
adjust our approach in light of any material changes. We are capturing the
lessons learned from our response to the pandemic phase and building
them into our plans for future pandemic response teams and to maintain
our overall business resilience capability.
Read more about employee wellbeing
on page 22
Mobiles, masts and health
The health and safety of our customers and the wider public has
always
{
been, and continues to be, a priority for us. Our masts fully
comply
{
with national guidelines, which are typically based on, or go
beyond, international guidelines set by the independent scientific body,
the International Commission for Non-Ionizing Radiation Protection
(‘ICNIRP’). There has been scientific research on mobile frequencies
for
{
decades, including those used by 5G. If exposure is within national
guidelines, the scientific consensus is that there is no adverse impact
on
{
health.
We continually monitor and evaluate our mobile networks to make sure
we meet all regulations. In addition, all the products we sell are rigorously
tested to ensure they comply with international safety guidelines.
As well as complying with national regulations, where our markets have
rolled out 5G, we have implemented a ‘Smart PowerLock’ (‘SPL’) feature.
This innovative technology, designed for use with adaptive antennas
used
{
for 5G, ensures that the transmitted radio frequency power
{
of the
antenna is always below a threshold when averaged over
{
a
{
predefined
time window. This guarantees compliance with electromagnetic field
(‘EMF’) regulations under all possible operating conditions for 5G sites.
This is now one of many software features that are routinely activated
when a new 5G site is commissioned. SPL also includes counters, so it is
possible to retrieve them to build evidence of compliance over several
past days/weeks for a given site if needed by regulators. The feature has
been accepted by regulators as effective.
Science monitoring
Scientific reviews have made a vital contribution to establishing industry
guidelines and standards. We follow the results of these independent
expert reviews to understand developments in scientific research related
to mobile devices, base stations and health.
In February 2022, an EU-funded scientific study into the effect of mobile
phone use on children and young people was published. The case study
was conducted between 2010 and 2015 across 14 countries with more
than 2,000 participants aged 10-24 years. The study found no evidence
of
{
a causal association between wireless phone use and brain tumours.
We fund research into mobile devices, base stations and health through
funding bodies such as national governments to ensure that the research
remains independent of industry influence, including our own. We also
respond to requests from bodies conducting research by providing
technical advice and information on the use of mobile devices. This helps
to ensure scientists have access to the best-quality information available.
ongoing focus to reduce the number of road risk and work at height
related incidents, with a focus on Vodafone’s Absolute Rules and
awareness campaigns within our local communities.
We track and investigate incidents relating to our top risks and breaches
of the Vodafone Absolute Rules. During the year, 656 breaches of
Vodafone Absolute Rules and 476 incidents relating to our key risks were
recorded. Each incident is investigated and we seek to identify the root
cause and ensure suitable corrective action is taken where necessary.
An
{
investigation into each incident is conducted at a scale proportionate
to the indicative level of risk.
Lost-time incident (‘LTI’) is the term we use when an employee is injured
while carrying out a work-related task and is consequently unable to
perform regular duties for a complete shift or period of time after the
incident. During the year, 12 LTIs were reported, five of these occurred
whilst working from home, four occurred in Vodafone offices, and two
occurred on work sites. In total these incidents account for 103 lost work
days. In response to the occurrence of injuries whilst working in the home,
we have reinforced the requirements of our safe home working policies
and guidance across all locations.
Key performance indicators
2022
2021
Work-related injuries or ill health
(excluding fatalities)
Employees
12
7
Contractors and suppliers
30
24
Lost-time incidents (‘LTI’)
Number of lost-time employee incidents
1
12
7
Lost-time incident rate per 1,000 employees
0.11
0.06
Total recordable fatalities
Employees
0
0
Suppliers’ employees/contractors
1
0
Members of the public
2
1
Note:
1.
Lost Time Incident means the loss of one or more work day as a result of injury.
COVID-19
Our response to the COVID-19 pandemic has prioritised the safety and
wellbeing of our people from the outset and has continued throughout
the pandemic as we responded to the emergence of new variants and
the
{
impact of cases varying across our footprint. An agile approach to
the
{
changing situation was coordinated by the COVID-19 Business
Continuity Plan programme management team, in line with World Health
Organization Guidance and industry best practice, chaired by the Chief
Human Resources Officer.
Whilst the global reporting of positive employee cases is no longer a
requirement across all countries, we continue to review incidence rates
with local teams, to identify any locations or functions requiring focus
and
{
ensuring controls are adequate or if they require strengthening.
During the pandemic, we supported employees by ensuring:
–
Local plans were in place to ensure all employees had a safe place
to
{
work, whether they are working on site or at home. We supported
employees with access to offices whenever possible, for instance
when
{
it was required to better protect their personal safety. We also
maintained guidance for employees with underlying health conditions,
where we ensured they were able to engage and connect with their
teams productively.
–
Access to physical, mental health and wellbeing support.
–
Digital learning was available to all employees and their families.
–
We continued to support Future Ready Vodafone and return to our
office plans.
–
We continued to be flexible with policies as required by local conditions
while exploring other policies that we could adjust/implement.
Strategic report
Governance
Financials
Other information
54
Vodafone Group Plc
Annual Report 2022
Responsible business (continued)
COVID-19
In the past year, we have not seen any further instances of damage to
masts and base stations incited by unproven, unsubstantiated theories
alleging links between COVID-19 and 5G. Our markets used a common
strategy to rebut the misinformation and condemn arson attacks on
our
{
base stations. In partnership with other operators, we have provided
clear
{
messages that there is no scientific evidence to link the spread of
COVID-19 to 5G.
Operating model
We have robust governance mechanisms in place and conduct regular
compliance assessments to ensure that our masts and devices meet
the
{
standards set by the Group policy and national regulations. During
the
{
year, the Group EMF leadership team met four times and reported
directly to the Executive Committee and the Board.
We conduct network measurements and calculations of EMF exposure
from the network masts and review the test reports we receive on EMF
testing on devices.
During the year, end-to-end compliance reviews in two of our European
markets demonstrated robust and optimised EMF risk management,
with
{
examples of best practice to share across our footprint. All Vodafone
markets also participated in a compliance self-assessment programme
with assurance provided through our compliance team.
Human rights
We want to make sure that we have a positive impact on people and
society, which includes respecting human rights in all our operations.
We
{
are a long-standing member of the UN Global Compact and follow
the United Nations Guiding Principles on Business and Human Rights,
which guide our approach.
Click to read more about our human rights approach:
vodafone.com/human-rights
The risks to people working in our supply chain are another area of focus
for us. We manage these risks through our supply chain management
programme which assesses our suppliers for indicators such as forced
labour and other risks to human rights, such as health and safety. We
also
{
believe in supporting the responsible sourcing of minerals globally.
Although we do not source minerals ourselves, we follow the best
practice of the OECD Due Diligence Guidance to understand whether
our
{
manufactured products include minerals which have been sourced
from smelters taking a responsible approach to sourcing.
Click to read more about our
Con
Ȥ
ict Minerals Reports and Statement:
vodafone.com/responsibleminerals
Our human rights programme also addresses a broader range of
human
{
rights risks, such as those relating to the design and deployment
of artificial intelligence, children’s rights, data ethics and risks we may
become connected with through our broader value chain, such as
enterprise customers or partner markets.
Our approach
We conduct due diligence to help make sure that we respect human
rights. Due diligence comes in various forms and at different moments in
our operations: it may be an independent human rights risk assessment
for a new market entry as we did for Ethiopia during the year, a thematic
impact assessment such the child rights assessment completed in FY21
and actioned this year, or it may be the ongoing assessments we do when
considering new markets.
The nature of our business also means that we often grapple with novel
issues concerning data ethics: for example, this year our Purpose and
Reputation Steering Committee considered the right balance between
our GDPR obligations to safeguard customer information, and our
responsibility to respect our employees’ privacy when working with such
data from home. The committee also approved principles to underpin our
Artificial Intelligence Framework which helps to determine which uses of
artificial intelligence require higher levels of approval within Vodafone.
Click to read more about our Arti
ȣ
cial Intelligence
Framework:
vodafone.com/ai-framework
We follow up assessments with mitigating actions, such as contractual
commitments to respect human rights in our partner market agreements,
and in our enterprise customer contracts.
Last year we reported that we had conducted a child rights assessment.
This year we have started to implement the recommendations focusing
first on updating our child protection policy for the digital world, to a
broader children’s rights policy.
Anyone who works for us can use Speak Up to raise concerns about
human rights issues. For example, this year we received a query relating to
our use of suppliers and their reputation for responsible business conduct
with respect to their work with customers other than Vodafone. The case
was investigated and discussed by our Purpose and Reputation Steering
Committee, and as a result contractual assurances to respect human
rights were put in place with the supplier.
Governance
The Chief External and Corporate Affairs Officer oversees our human
rights programme and is a member of the Executive Committee. The
senior human rights manager manages our programme, with the support
of a cross-functional internal Human Rights Advisory Group, comprising
senior managers responsible for: privacy, security, responsible sourcing,
and diversity and inclusion, amongst others. We report regularly on our
progress to the Purpose and Reputation Steering Committee, which
assists the Executive Committee in fulfilling duties with regards to our
purpose, reputation management and policy.
Our Human Rights Policy Statement details how we do this, and is backed
up by our internal Human Rights Policy which sets out how our people
must ensure we respect human rights, including steps to take through
our
{
other aligned policies, such as those covering child protection,
conflict
{
minerals, health, safety and wellbeing, human resources,
privacy
{
management and law enforcement assistance.
Click to read our Human Rights Policy Statement:
vodafone.com/human-rights-policy-statement
Human rights risks
As a global telecommunications operator, we connect people.
This
{
means
{
that our most significant human rights risks relate to our
customers’ rights to privacy (concerning their data that we safeguard)
and
{
freedom of expression (in terms of their access to information,
through the connections we provide). Local laws and regulations can
mandate that telecommunications operators must provide assistance
to
{
governments, and we must comply with lawful government requests
as part of our operating licences. This might include the disclosure of
customer information, or limiting access to digital networks and services.
However, our internal law enforcement assistance policy guides us on
how to do this in a rights-respecting way. We also publicly advocate for
these powers to conform to international human rights standards both
through our own transparency reporting and our membership of the
Global Network Initiative (‘GNI’).
Click to read more about how we handle law
enforcement
b
demands:
vodafone.com/
handling-law-enforcement-demands
Click or scan to watch a video summarising
our human rights approach:
investors.vodafone.com/videos
55
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Our approach
When new suppliers tender for work, they are asked to demonstrate
policies and procedures that support safe working, diversity in the
workplace and to address carbon reduction, renewable energy, plastic
reduction, circular economy and product life-cycle which account for
up
{
to 20% of the overall evaluation criteria. Commitments made by our
suppliers are assessed against our own purpose strategy with respect
to
{
diversity & inclusion (5%), the environment (5%) and health & safety
(10%) in categories where there is a safety risk. We have included purpose
criteria in all FY22 tenders.
Our requirements are backed up by risk assessments, audits and operational
improvement processes, which are included in suppliers’ contractual
commitments. Some site audits are conducted by the Joint Alliance for
CSR (‘JAC’), formerly known as the Joint Audit Cooperation, an association
of telecommunications operators established to improve ethical, labour
and environmental standards in the
{
technology supply chain, which
Vodafone chairs. This year, 71 site assessments were conducted
(either
{
by
{
Vodafone or through JAC).
This year we have launched an improved supplier qualification process
which uses a risk based assessment to review compliance for any new
suppliers across 13 countries. The roll-out to remaining operations is
subject to consultation with the respective workers’ councils.
We report on our approach to preventing modern slavery and human
trafficking in our business and supply chain in our annual Modern
Slavery
{
Statement.
Click here to read our Modern Slavery Statement:
vodafone.com/modern-slavery-statement
Governance
The Chief Financial Officer oversees our supply chain and is a member
of
{
the Executive Committee and Board. Reporting to the Chief Financial
Officer, the Chief Executive Officer of the VPC is responsible for the
implementation of our Code of Ethical Purchasing. Progress is reported
regularly to the Vodafone Procurement Company Board. Procurement is
a highly centralised function within the business, with the majority of our
external spend managed by VPC. This enables us to maintain a consistent
approach to supplier management and makes it easier to monitor and
improve supplier performance across our markets.
Collaboration
We play our part in developing the global understanding of what
businesses should do to respect human rights. We are a member of
the
{
Global Network Initiative, alongside other initiatives such as the
United
{
Nations B-Tech Project which convenes business, civil society and
government to advance implementation of the UN Guiding Principles in
the tech sector. This year, we were recognised in the Global Child Forum
Benchmark, the State of Children’s Rights and Business 2021, as a leader
and the top scoring company in the Technology and
Telecommunications sector.
Responsible supply chain
We spend approximately €24 billion a year with around 9,000 direct
suppliers around the world to meet our businesses’ and customers’
needs
{
across network infrastructure, IT and services related to fixed
lines,
{
mobile masts and data centres that run our networks.
The majority of our external spend is managed by our Vodafone
Procurement Company (‘VPC’), based in Luxembourg, and our shared
services (‘_VOIS’), based in Ahmedabad, India. Our next largest area of
spend is on the products we sell to our customers, including mobile
phones, tablets, SIM cards, broadband routers, TV set-top boxes and IoT
devices. This centralised approach helps to ensure that we maintain a
consistent approach to supplier management across Vodafone, from on
boarding and vetting a supplier, to raising orders and paying for delivered
goods and services.
Supply chain risks
The main risks in our supply chain relate to three key areas: health and
safety matters related to non-compliant fire safety measures; excessive
working hours compounded by COVID-19 disruption and environmental
matters related to non-compliant chemical storage and lack of carbon
reduction programmes. This year, these three risks made up 77% of all
non-compliances found in our supply chain through our assessments.
Suppliers that do not meet our standards are provided with a corrective
action plan to address any areas for improvement and are required to
submit evidence that this has been completed.
Policy
Every supplier that works for Vodafone is required to comply with
our
{
Code of Ethical Purchasing. These commitments extend down
through the supply chain so that a supplier with which we have a direct
contractual relationship (Tier 1 supplier) in turn is required to ensure
compliance across its own direct supply chain (Tier 2 supplier from
Vodafone’s perspective) and beyond. The Code of Ethical Purchasing is
based on international standards, including the Universal Declaration of
Human Rights and the International Labour Organization’s Fundamental
Conventions on Labour Standards. It stipulates the social, ethical, and
environmental standards that we expect, including areas such as child
and
{
forced labour, health and safety, working hours, discrimination and
disciplinary processes.
Click here to read our Code of Ethical Purchasing:
vodafone.com/code-of-ethical-purchasing
Strategic report
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Other information
56
Vodafone Group Plc
Annual Report 2022
Responsible business (continued)
Anti-bribery and corruption
At Vodafone, we support and foster a culture of zero
{
tolerance towards
bribery or corruption in all our
{
activities.
Our anti-bribery policy
Our policy on this issue is summarised in our Code of Conduct and
states
{
that employees or others working on our behalf must never offer
or accept any kind of bribe. Our anti-bribery policy is consistent with the
UK Bribery Act and the US
{
Foreign Corrupt Practices Act, and provides
guidance about what constitutes a bribe and prohibits giving or receiving
any excessive or improper gifts and hospitality. Any policy breaches can
lead to dismissal or termination of contract.
Click here to read our Code of Conduct:
vodafone.com/code-of-conduct
Facilitation payments are strictly prohibited and our employees are
provided with practical training and guidance on how to respond to
demands for facilitation payments. The only exception is when an
employee’s personal safety is at risk. In such circumstances, when a
payment under duress is made, the incident must be reported as soon
as
{
possible afterwards.
To support our approach, Vodafone is also a member of Transparency
International UK’s Business Integrity Forum.
Governance and risk assessment
Our Chief Executive and Executive Committee oversee our
{
efforts to
prevent bribery. They are supported by local market Chief Executive
Officers, who
{
are responsible for ensuring that our anti-bribery
programme is
{
implemented effectively in their local market. They
in
{
turn
{
are supported by local specialists and by a dedicated Group
team
{
that is solely focused on anti-bribery policy and compliance. The
Risk and
{
Compliance Committee assists the Executive Committee in
fulfilling
{
duties with regards to risk management and policy compliance.
As part of our anti-bribery programme, every Vodafone business must
adhere to minimum global standards, which include:
–
Ensuring there is a due diligence process for suppliers and business
partners at the start of the business relationship;
–
Completion of the global e-learning training for all employees, as well
as tailored training for higher risk teams; and
–
Using Vodafone’s global online gift and hospitality registration platform,
as well as ensuring there is a process for approving local sponsorships
and charitable contributions.
The risks we face evolve constantly but broadly fall into the areas
summarised in the table below, which outlines the principal risk categories
and the mitigation measures adopted.
Business integrity
We are committed to ensuring that our business
operates ethically, lawfully and with integrity
wherever we operate as this is critical to our
long-term success.
Tax and economic contribution
As a major investor, taxpayer and employer, we make a
{
significant
contribution to the economies of the countries where we operate.
In
{
addition to direct and
{
indirect taxation, our financial contributions
to
{
governments also include other areas such as radio spectrum fees
and
{
spectrum auction proceeds.
Scan or click to watch our Group Head of Tax
summarise our approach to taxation:
investors.vodafone.com/videos
Tax transparency
Our most recent tax report sets out our total contribution to public
finances on a cash-paid basis for both 2019 and 2020. In 2021, we
contributed, directly and indirectly, more than €9.6 billion to public
finances worldwide, compared with €9.4 billion in 2020. The year-on-year
increase was due to higher spectrum payments in 2021. In 2021, we paid
€2.4 billion in direct taxes, including more than €1.1 billion in corporate
income taxes, nearly €1.5 billion via non-taxation based revenue
mechanisms, such as payments for the right to use spectrum, and
collected nearly €5.7 billion of indirect taxes for governments around
the
{
world.
Acting with integrity in the creation and execution of our tax strategy,
policies and practices is absolutely core to our approach to tax, as is our
commitment to transparency. We disclose our financial contributions to
governments at a country level, as we believe this is an important way to
demonstrate that it is possible to achieve an effective balance between
a
{
company’s responsibilities to society as a whole, through the payment
of taxes and other government revenue-raising mechanisms, and its
obligations to its shareholders. The information we share aims to help
our
{
stakeholders understand our approach, policies and principles.
We also share our views on key topics of relevance, including the latest
on
{
the taxation of the digital economy, as well as publishing our OECD
country-by-country disclosure, as submitted to the UK’s tax authority
(HMRC), as well as how our disclosures compare to the B Team tax
principles and the requirements of the Global Reporting Initiative.
Our tax report for 2022 will be published by the end of the year,
{
following
the submission of our tax returns and payment of all applicable
{
taxes.
Click here to read more about our tax and
economic
b
contribution to public
ȣ
nances:
vodafone.com/tax
57
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Risk
Response
Operating
in
{
high-risk
markets
We undertake biennial risk assessments in each of our
local operating companies and at Group, so we can
understand and limit our exposure to risk.
Business
acquisition
and
integration
Anti-bribery pre and post acquisition due diligence is
carried out on a target company. Red flags identified
during the due diligence process are reviewed and
assessed. Following acquisition, we implement our
anti-bribery programme.
Spectrum
licensing
To reduce the risk of attempted bribery, a specialist
spectrum policy team oversees our participation in
all
{
negotiations and auctions. We provide appropriate
training and guidance for employees who interact with
government officials on spectrum
{
matters.
Building and
upgrading
networks
Our anti-bribery policy makes it clear that we never
offer
{
any form of inducement to secure a permit, lease or
access to a site. We regularly remind all employees and
contractors in network roles of this prohibition, through
tailored training sessions and
{
communications.
Working with
third parties
Suppliers and other relevant third parties working for or
on behalf of Vodafone, must comply with the principles
set out in our Code of Conduct and Code of Ethical
Purchasing, as well as
{
have programmes in place to ensure
suppliers’ employees and contractors are aware of these
policies. Third-party due diligence is completed at the
start of our business relationship with suppliers, other
third parties and partners. Through their contracts with
us, our suppliers, partners and
{
other third parties
make a
commitment to implement and
{
maintain proportionate
and effective anti-bribery compliance
{
measures.
We regularly remind current suppliers of our policy
requirements and complete detailed compliance
assessments across a sample of higher-risk and
higher-value suppliers. Select
{
high-risk third parties are
trained to ensure awareness of
{
our zero-tolerance policy.
External assurance
KPMG LLP has provided independent limited assurance over selected data within our ESG Addendum, using the assurance standard ISAE (UK) 3000,
and for selected Greenhouse Gas Data, ISAE 3410. KPMG has issued an unqualified opinion over the selected data and their full assurance statement,
along with the reporting criteria, is available on our website at investors.vodafone.com/esgaddendum.
The data subject to KPMG LLP’s assurance is detailed below;
Pillar
Metric
Unit
2022
Page
Inclusion for All
Percentage of women in management and senior leadership roles
%
32
39
Number of M-Pesa customers
million
52.4
37
4G population coverage
%
81.6
37
Planet
Total Scope 1 emissions
million tonnes CO
2
e
0.28
42
Total Scope 2 emissions (location-based)
million tonnes CO
2
e
1.98
–
Total Scope 2 emissions (market-based)
million tonnes CO
2
e
0.82
42
Total GHG emissions: Scope 1 and Scope 2 (location-based)
million tonnes CO
2
e
2.26
–
Total GHG emissions: Scope 1 and Scope 2 (market-based)
million tonnes CO
2
e
1.09
42
Percentage of total purchased electricity that comes from renewable sources
%
77
42
Scope 3 emissions (air travel)
million tonnes CO
2
e
0.003
–
Total emissions avoided as a consequence of IoT technologies and services
million tonnes CO
2
e
15.6
43
Digital Society
Number of unique users accessing Vodafone’s V-Hub service (cumulative)
million
3.6
44
With the exception of the metrics outlined above, the information contained within the purpose and responsible business sections (pages 34 to 58)
has
{
not been independently verified or assured. All the information included within these pages, including the metrics outlined in the table above,
has
{
been taken from sources which we deem reliable. While all reasonable care has been taken to ensure the accuracy of the data, Vodafone has not
arranged for independent verification of the data with respect to its accuracy or completeness. Our ESG Addendum includes further information with
regard to methodologies for certain metrics.
Winning and
retaining
business
We provide targeted training for our Vodafone Business
and Partner Markets sales teams. In addition, we also
maintain and
{
monitor a global register of gifts and
hospitality to ensure that inappropriate offers are
not
{
accepted or extended by our
{
employees.
Engaging employees to raise awareness of
{
bribery
{
risk
We run a multi-channel high-profile global communications programme,
‘Doing What’s Right’, to engage with employees and raise awareness and
understanding of the policy. The ‘Doing What’s Right’ programme features
e-learning training, including a specific anti-bribery module. The latest
anti-bribery module, DWR 3.0, was launched in September 2021 and
is
{
a
{
video-based module requiring employees to identify risks they see
playing out in the conversations on screen. Currently approximately 80%
of the employees that were assigned the training have completed it and
the training has received a five star rating from employees. For higher-risk
employees, additional tailored training programmes are used to cover
relevant scenarios for those employees.
Assurance
Implementation of the anti-bribery policy is monitored regularly in
all
{
local markets as part of the annual Group assurance process, which
reviews key anti-bribery controls. Due to the challenging travel conditions
during the year, self-assessments and quality reviews were undertaken
instead of local market visits in Egypt, Lesotho, Vodafone Procurement
Company and Vodafone Roaming Services. We also conducted a
thematic review across the key areas of high-risk sales intermediaries
and
{
representatives, and provided training to high-risk employees in
Czech Republic, Ireland, Portugal and Romania. Further to this, Internal
Audit completed audits of the anti-bribery programme in a number of
local markets in Europe and Africa.
The reviews demonstrate good implementation of the anti-bribery
programme. Some areas for improvement relating to third-party risk
management and training of high-risk employees were identified and
appropriate action plans to improve the control environment were put
in
{
place.
Strategic report
Governance
Financials
Other information
58
Vodafone Group Plc
Annual Report 2022
Reporting requirement
Vodafone policies and approach
Section within Annual Report
Page(s)
Environmental matters
Planet performance
Planet
41-44
Climate change risk
Risk management
59-67
Employees
Code of Conduct
Responsible business and
anti-bribery and
{
corruption
47, 56
Occupational health and safety
Health and safety
52-53
Diversity and inclusion
Workplace equality
38-40
Social and community matters
Driving positive societal
transformation performance
Inclusion for All
36-40
Digital Society
44-45
Stakeholder engagement
Stakeholder engagement
14-15
Mobiles, masts and health
Mobiles, masts and health
53-54
Human rights
Human rights approach
Human rights
54-55
Code of Ethical Purchasing
Responsible supply chain
55
Modern Slavery Statement
Responsible supply chain
55
Anti-bribery and corruption
Code of Conduct
Responsible business
47
Anti-bribery policy
Anti-bribery and corruption
56
Speak Up process
Responsible business
47
Policy embedding, due diligence and outcomes
Purpose, sustainability and
responsible business
36-57
Risk management
59-67
Description of principal risks and impact
of business
{
activity
Risk management
53-67
Description of business model
Business model
10
Non-financial key performance indicators
Financial and non-financial performance
Purpose, sustainability and
responsible business
4-5
36-57
UK Streamlined Energy and Carbon Reporting (‘SECR’)
In accordance with SECR requirements, this provides a summary of GHG emissions and energy data for Vodafone UK, in comparison with
global
{
performance.
Group
(excluding
Vodafone UK)
Vodafone UK
Vodafone UK %
proportion of
Group data
Scope 1 GHG emissions (million tonnes CO
2
e)
0.26
0.01
4
Scope 2 market-based GHG emissions (million tonnes CO
2
e)
0.78
0.03
4
Scope 2 location-based GHG emissions (million tonnes CO
2
e)
1.85
0.13
7
GHG emissions per EUR million of revenue (tonnes of CO
2
e)
26.77
7.35
–
Total energy consumption (GWh)
5,261
664
13
Non-Financial information
Non-financial information statement
The table below outlines where the key content requirements of the
{
non-financial information statement can be found within this document
(as
{
required by
{
sections 414CA and 414CB of the Companies Act 2006).
Vodafone’s sustainable business reporting also follows other international reporting frameworks, including the Global Reporting Initiative,
the
{
SASB
{
Standards, CDP and GHG Reporting Protocol.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Click to read our SASB disclosures:
investors.vodafone.com/sasb
59
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Overview of risk governance structure
Risk management
Board/Audit and Risk Committee
–
Provide oversight for the Vodafone Group
–
Discuss, challenge and make a robust assessment of principal and emerging risks
–
Ensure appropriate risk culture is embedded throughout the organisation
Local oversight committees
Provide oversight for the local risk management programme
Local risk managers
Contact point for each market/entity on risk, facilitate all activities as defined by the
global
{
risk management framework
Local market CEOs
Set local objectives, identify priority risks and align tolerance levels with the
Vodafone
{
Group guidance
Local risk owners
Senior managers in local management teams are responsible for local risks and the
local
{
risk programme to manage, measure, monitor and report on the risks
Risk and Compliance
Committee
–
Reviews principal,
watchlist and
emerging risks
–
Reviews
effectiveness of
risk
{
management
across the Group
Group risk team
–
Responsible for the
application of the global risk
management framework
–
Supports the Board/ExCo
by
{
creating programmes to
strengthen our risk culture
Group risk owners
–
ExCo risk owners
have responsibility
for management
of
{
the risk assigned
to
{
them
–
Senior executive risk
champions identify
and implement
mitigating actions
g
Assurance
Business assurance
functions
Review and provide
assurance over business
controls for the Group
and local markets
Internal Audit
Supports the Audit
and
{
Risk Committee
in
{
reviewing the
effectiveness of the
global risk management
framework and
management of
individual
{
risks
Vodafone Group
Local markets or
Group entities
Managing risks and uncertainties is an integral part
of
b
successfully executing our strategic objectives
and
b
delivering our long-term success. Risks are not
static and as the environment changes, so do risks
– some diminish or increase, while new risks appear.
Identifying our risks
The objective of the risk management function is to make risk meaningful
and relevant to the delivery of the Vodafone strategy, acting as an enabler
that helps make informed decisions across both the Group and our
local
{
markets.
We take an end-to-end approach to risk management within Vodafone.
We start by identifying and assessing risks which could affect the local
strategy and operations in all local markets and Group entities. A consolidated
list of these risks is then presented to a selection of Group senior leaders
and executives, alongside the outputs from our external risk scanning
exercise. Applying a Group-wide perspective, these executives evaluate
and determine the top risks warranting further exploration. The proposed
principal risks (pages 60 to 63), emerging risks and risk watchlist (page 64)
are agreed by our Executive Committee (‘ExCo’) before being submitted
to the Audit and Risk Committee and the Board for scrutiny and approval.
Managing uncertainty
in our business
Managing our risks
We assign each of our risks to a category (strategic, operational or
financial – see next page) and identify the source of the threat (internal
or
{
external). This approach enables a better understanding of how we
should treat the risk and provide the right level of oversight and assurance.
Executive risk owners are accountable for confirming adequate controls
are
{
in place and that the necessary treatment plans are implemented
to
{
bring the risk within an acceptable tolerance level. We continue
to
{
monitor the status of our risk treatment plans across the year
and
{
perform
{
in-depth reviews of our risks which are presented to
the
{
relevant
{
oversight committees.
Read more about the Audit and Risk Committee
on pages 83 to 88
We also develop severe but plausible scenarios for each principal risk,
which provide additional insights into possible threats and enable a
better
{
risk treatment strategy. Scenarios are also used for the purpose
of
{
assessing our viability.
Read more about our viability statement
on page 65
The diagram below shows a simplified, high-level governance structure
for risk management.
Strategic report
Governance
Financials
Other information
60
Vodafone Group Plc
Annual Report 2022
Principal risks
Mitigation activities
We have a risk-based approach to managing
cyber security. We actively identify risks and
threats, design layers of control and implement
controls across all parts of the Group. The
approach balances controls that prevent the
majority of attacks, detect events and respond
quickly to reduce harm.
Scenario
Each year we model a severe but plausible
scenario. These have included attacks on core
infrastructure, a bulk data breach and loss of
major customer facing systems. We perform
regular cyber crisis simulations with senior
management in our markets and Group
functions using a tailored set of scenarios.
Emerging threats
Cyber risk is constantly evolving in line with
technological and geopolitical developments.
We anticipate threats will continue from existing
sources, but also evolve in areas such as 5G, IoT,
vendor
software integrity, quantum computing
and the use of AI and machine
{
learning.
Read more about cyber and an
incident that affected Portugal
on
b
pages
b
49 to 51
Cyber threat
Risk ranking
movement
Risk owner
Group Technology Officer
Our strategy
Strategic
Risks affecting the execution of our strategy:
A
Adverse political and policy environment
B
Strategic transformation
C
Disintermediation
D
Infrastructure competitiveness
E
Portfolio transformation
F
Adverse market conditions
Financial
Risk related to our financial status, standing and continued growth:
G
Adverse changes in macroeconomic conditions
Operational
Risks impacting our operations:
H
Cyber threat
I
Supply chain disruption
J
Technology resilience and future readiness
Risk order is based on the category and not risk ranking
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New risk
NEW
Customer commitments
Best connectivity products & services
Leading innovation in digital services
Outstanding digital experiences
Our strategy
Enabling strategies
Simplified & most efficient operator
Social contract shaping digital society
Leading gigabit networks
Risk management (continued)
Risk categorisation and interdependencies
Description
An external attack, insider threat or supplier
breach could cause service interruption or
confidential data breaches.
O
p
e
r
a
t
i
o
n
a
l
S
t
r
a
t
e
g
i
c
F
i
n
a
n
c
i
a
l
J
H
I
B
C
E
D
F
G
A
By analysing the correlation between risks, we can identify those that have the potential to
impact or increase other risks and ensure they are weighted appropriately.
This exercise also informs our scenario analysis, particularly the combined scenario used in the
long-term viability statement.
Read more about our viability statement
on page 65
Key
:
Exte
rn
al
Internal
Bidirectional
Unidirectional
61
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New risk
NEW
Supply chain disruption
Adverse political and
policy environment
Strategic transformation
Mitigation activities
We are closely monitoring the evolution of
the
{
geopolitical environment. This enables
us
{
to respond to emerging challenges
and
{
to
{
comply with regulations, economic
sanctions and trade rulings. We also mitigate
our exposure through having multi-year
contracts
{
with key suppliers, forecasting and
forward ordering our inventory requirements
in
{
anticipation of extended lead-times as
well
{
as continuing to execute our logistics
optimisation strategy.
Scenario
Political decisions or environmental disasters
affecting our ability to use equipment from
specific vendors could cause trade and supply
chain disruptions.
Emerging threats
We are reliant on a number of key suppliers,
capable of providing infrastructure needed
to
{
run our network or products needed to sell
to our customers, who in turn require critical
components such as chipsets, which could be
adversely impacted by global supply disruption
factors. Changes in political landscape, outside
of Vodafone’s control, for example, between
US and China or long-term impacts from
the
{
war in Ukraine may significantly impact
upgrading and maintaining our network or
impact product availability when requested
by
{
our customers. Disruption may lead to an
increase in our costs from areas such as higher
raw material prices, energy and shipping costs.
Risk ranking
movement
Risk owner
Chief Financial Officer
Our strategy
NEW
Mitigation activities
We actively address issues openly with
policy
{
makers and regulatory authorities to
find mutually acceptable ways forward. As
a
{
last resort we uphold our rights through
legal
{
means.
Scenario
Exposure to additional liabilities and
reputational damage, triggered by
policy
{
maker and/or regulatory authority
interventions, or if tax laws were to adversely
change in the markets in which we operate.
Emerging threats
Regulations are becoming geographically
more
{
diverse and fragmented with increases
in
{
protectionist behaviours, re-emergence
of
{
preference for national champions, tax
increases and heightened demands from
an
{
ESG perspective.
Risk ranking
movement
Risk owner
Chief External and
Corporate Affairs Officer/
Chief Financial Officer
Our strategy
Mitigation activities
We have specialist teams executing our
organisational and digital transformation
activities. We have robust investment and
governance structures in place, such as our
Digital Steering Committee and Global Product
Board, dedicated to steering the transformation
efforts and ensuring we execute at scale. We
have also established our Products Operating
Model to transform our global product
management approach.
Scenario
The inability to achieve the expected benefits
through transformation activities whilst evolving
to a new generation connectivity and digital
services provider for Europe and Africa.
Emerging threats
The increased pace of change in the
organisation means we have to monitor
and
{
maintain the required culture and
skillset
{
to
{
support our transformational
initiatives. Competitors in the new service
categories are
{
digital native, so transforming
our agile delivery capabilities will be critical.
Externally, as customer behaviours and their
preferences change, we might have to adapt
our transformation programmes accordingly.
Risk ranking
movement
Risk owner
Chief Commercial Officer/
Chief Human Resources Officer
Our strategy
Customer commitments
Best connectivity products & services
Leading innovation in digital services
Outstanding digital experiences
Our strategy
Enabling strategies
Simplified & most efficient operator
Social contract shaping digital society
Leading gigabit networks
Description
Disruption in our supply chain could mean that
we are unable to execute our strategic plans,
resulting in increased cost and reduced choice
as well as service quality.
Description
An adverse political and policy environment
could impact our strategy and result
in
{
increased costs, create competitive
disadvantage or have negative impact
on
{
our
{
return on capital employed.
Description
Failure to effectively execute the
transformational activities to deliver on
our
{
strategy could result in loss of business
value and/or additional cost.
Strategic report
Governance
Financials
Other information
62
Vodafone Group Plc
Annual Report 2022
Mitigation activities
We continually strive to introduce innovative
propositions and services which enable us
to
{
deepen customer engagement beyond
connectivity. We are focused on simplifying
our
{
product portfolio, building capabilities and
partnering to create value beyond connectivity,
improving our operating model and processes,
and accelerating our digital transformation, in
order to offer the best customer experience.
Scenario
Large technology players invest in products
impacting our customer relationships,
cannibalising existing revenues and limiting
future growth opportunities in digital services
in Vodafone Business.
Emerging threats
Emerging risks span both Consumer and
Business
{
segments. In the Consumer segment,
the growing choice of communication solutions
could threaten our core business, while streaming
services could threaten our TV
{
business. In the
Business segment, large technology players
could attempt to move further along the
telecommunication sector’s value chain.
Mitigation activities
We have a relatively resilient business model.
Our offers are competitive in the markets
in
{
which we operate. We are supporting our
business customers’ efficiencies through our
innovative products. We have a long average
life of debt which minimises refinancing
requirements, and the vast majority of our
interest costs are fixed.
Scenario
A severe contraction in economic activity leads
to lower consumer spending and lower cash
flow generation for the Group and disruption
in
{
global financial markets impacts our ability
to refinance debt obligations as they fall due.
Emerging threats
Because this is an externally driven risk, the
threat environment is continually changing.
External factors such as the war in Ukraine or
a
{
potential sovereign debt crisis could have
future impacts on economic activity across our
markets. The financial markets are currently
experiencing high levels of volatility, and both
sovereign debt and inflation have reached
record levels. These could lead to a significant
change in the availability and cost of capital.
Disintermediation
Infrastructure competitiveness
Description
Failure to meet customers’ expectations
with
{
best available broadband technology in
our fixed and mobile networks could lead to
loss of revenue.
Description
Failure to effectively respond to threats from
emerging technology or disruptive business
models could lead to a loss of customer
relevance, market share and new/existing
revenue streams.
Description
Adverse changes to economic conditions
could result in reduced customer spending,
higher interest rates, adverse inflation, or
foreign exchange rates. Adverse conditions
could also lead to limited debt refinancing
options and/or increase in costs.
Risk ranking
movement
Risk owner
Group Technology Officer
Our strategy
NEW
Risk ranking
movement
Risk owner
Chief Commercial Officer/
CEO Vodafone Business
Our strategy
Risk ranking
movement
Risk owner
Chief Financial Officer
Our strategy
Mitigation activities
Our Tech2025 Strategy incorporates fixed
and
{
mobile network evolution steps to enhance
broadband coverage and network performance.
In collaboration with our strategic suppliers,
we
{
are testing and deploying new technologies
which provide higher connection throughput,
lower latency and increased capacity.
Scenario
Competitors target our customers by
overbuilding our fixed connectivity network
or
{
accelerating their deployment of 5G mobile
connectivity network or data usage growth
accelerates, requiring us to accelerate the
rate
{
of investment or become uncompetitive
through underinvesting
Emerging threats
New and emerging applications require not
just low latency but also low jitter (no variation
in latency). High-end gaming, Augmented
reality/Virtual reality and future Metaverse
applications using holographic displays
and
{
haptic feedback sensors for immersive
experiences may require higher upstream
speeds with low latency and low jitter which
is
{
a
{
challenge today for both fixed and
mobile
{
networks.
Adverse changes in
macroeconomic conditions
Risk management (continued)
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New risk
NEW
Customer commitments
Best connectivity products & services
Leading innovation in digital services
Outstanding digital experiences
Our strategy
Enabling strategies
Simplified & most efficient operator
Social contract shaping digital society
Leading gigabit networks
63
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
Portfolio transformation
Adverse market conditions
Description
Failure to effectively execute on plans to
transform and shape the portfolio could result
in failure to deliver growth in revenue and
improved returns.
Description
Increasing competition could lead to price
wars, reduced margins, loss of market share
and/or damage to market value.
Technology resilience
and future readiness
Description
Network, IT or platform outages and/or
any
{
delays delivering our IT modernisation
programme could lead to dissatisfied
customers and/or impact revenue.
Risk ranking
movement
Risk owner
Chief Executive/
Chief Financial Officer
Our strategy
Risk ranking
movement
Risk owner
Chief Commercial Officer
Our strategy
Mitigation activities
We monitor and pursue opportunities to
optimise our portfolio to deliver value for our
shareholders and improve returns. We actively
assess opportunities to, i) generate and realise
value from our assets, ii) deliver value accretive
in-market consolidation to deliver sustainable
market structures, iii) streamline and simplify
our portfolio.
Scenario
We are not an active participant of in-market
consolidation in key markets and do not
benefit from the resulting synergies.
Emerging threats
Regulatory approach to in-market
consolidation may not change in the
direction
{
expected, limiting opportunities
for
{
value accretive in-market consolidation.
The cost of financing transactions could also
be impeded by a higher cost of capital with
the
{
current inflationary environment resulting
in increased interest rates.
Mitigation activities
We closely monitor the competitive
environment in all markets and react
accordingly to consumer and business
needs.
{
In many consumer markets, we have
launched ‘second’ brands in order to compete
effectively and efficiently in the value segment.
Additionally, we evolve our offers and tariff
plans and aim to provide a differentiated
customer experience.
Scenario
Aggressive pricing, accelerated customer
losses to aggressive low value players on
mobile and fixed, and disruptive new market
entrants in key European markets result in
greater customer churn and pricing pressures
impacting our financial position.
Emerging threats
While emerging threats often depend
on
{
individual market structures and the
competitive landscape, external factors such as
the war in Ukraine and the pandemic present
common global trends. The global sanctions,
global energy prices, and record high inflation
levels could potentially threaten disposable
income available for connectivity.
NEW
Mitigation activities
Recovery targets are set for critical assets
to
{
limit the impact of service outages.
A
{
global
{
policy outlines the controls
required
{
to
{
ensure that technology
services
{
are resilient
{
and in
{
alignment
with
{
these targets.
{
We
{
identify the
{
risks for
the
{
relevant IT
{
programmes to determine
whether they are
{
being effectively mitigated.
Where gaps are
{
identified, recommendations
for mitigation are raised and
{
the programmes
are effectively de-risked.
Scenario
A major outage in a critical data centre could
reduce service to customers, affecting revenue
and reputation.
Emerging threats
Extreme weather events may
{
increase the
likelihood or frequency of technology failure.
Additionally, deliberate attacks on national
critical infrastructure could increase during
war
{
or volatile periods. For IT transformation
the increasing pace of change of customer
needs and the market environment may
have
{
an impact on the scope and timeliness
of
{
the transformation programmes, thereby
increasing the likelihood that they do not
deliver the benefits they set out to achieve.
Risk ranking
movement
Risk owner
Group Technology Officer
Our strategy
NEW
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New risk
NEW
Customer commitments
Best connectivity products & services
Leading innovation in digital services
Outstanding digital experiences
Our strategy
Enabling strategies
Simplified & most efficient operator
Social contract shaping digital society
Leading gigabit networks
Strategic report
Governance
Financials
Other information
64
Vodafone Group Plc
Annual Report 2022
Key changes to our principal risks:
–
The scope of the
Strategic transformation
principal risk has
been
{
clarified to focus on sub-risks that are more within our control
internally. We have included product innovation and delivery as a
sub-risk, which was previously reported in the Disintermediation
principal risk. The
Portfolio transformation
element has been
removed and now forms a standalone risk.
–
A new risk
Supply chain disruption
has been introduced. This risk
expands on the geopolitical elements, (previously covered within
Geopolitical risk in supply chain principal risk) and covers a broader
range of supply chain risks.
–
Technology failure has been combined with IT transformation in a
new risk
Technology resilience and future readiness
.
–
Global economic disruption has been renamed
Adverse changes
in macroeconomic conditions
. The risk includes inflation,
interest rates and exchange rates, in addition to liquidity and market
access which were included in previous years.
–
A new risk,
Infrastructure competitiveness
, was included as a
principal risk.
–
Legal and regulatory compliance
has been removed from
the
{
principal risk list, however, it will still be tracked through our
risk
{
watchlist (see section below).
Watchlist risks
Our watchlist risk process enables us to monitor material risks to
Vodafone Group which fall outside of our top principal risks list.
These
{
include, but are not limited to:
Legal compliance
The legal compliance risk is made up of multiple sub-risks (sanctions and
trade controls, competition law, anti-bribery and anti-money laundering).
Controls are in place to monitor and manage these risks and for
compliance with the relevant regulations and legislation.
Read more about
ȁ
Doing What’s Right’ training
on page 47
Data management and privacy
As data volumes continue to grow and regulatory and customer scrutiny
increases, it is important that we manage our privacy risks effectively.
Read more about privacy
on pages 47 to 49
Electromagnetic field (‘EMF’)
The health and safety of our customers and the wider public has always
been, and continues to be, a priority for us. We know that some people are
concerned about whether there are risks to health from mobile phones
and radio masts. We refer to the current body of scientific evidence so
that the services and products we provide are within prescribed safety
limits and adhere to all relevant standards and national laws.
Read more about EMF
on page 53
Climate change
As part of our commitment to operate ethically and sustainably, we are
dedicated to understanding climate-related risks and opportunities and
embedding responses to these into our business strategy and operations.
Read more about the Task Force on Climate-related
Financial
b
Disclosures (
ȁ
TCFD’) on pages 66 to 67
Emerging risks
We face a number of uncertainties where an emerging risk may
potentially impact us in the
{
longer term. In some cases, there may be
insufficient information to understand the likelihood, impact or velocity
of
{
the risk. We also might not be able to fully define a mitigation plan
until
{
we have a better understanding of the
{
threat.
We continue to identify new emerging risk trends, using the input from
analysis of the external environment. Furthermore, we have strengthened
the identification process by involving our functional experts and our
global risk community in this emerging risk scanning exercise.
Once the emerging risks are prioritised by the functional experts, scenarios
are created to assist in the analysis of each risk. These emerging risks and
scenarios are provided to the Risk and Compliance Committee and the
Audit and Risk Committee for further scrutiny.
During the year, three additional emerging risks were added to our list:
–
Inflation (beyond a three-year period);
–
Generation Z as customers; and
–
Disintermediation (beyond a three-year period).
Macro factors affecting the risk profile
We continue to closely monitor the ongoing effects on the economy
and
{
operations brought on by the turmoil from the COVID-19 pandemic.
We continue to implement treatment plans throughout our business to
reduce the impact.
Given that the current geopolitical environment is evolving and continues
to develop we continue to consider the consequential impacts for the
Group and its operations. Multiple scenarios have been evaluated to
identify consequential risks and what management actions would
be
{
required.
Read more in the mega trends section
on pages 12 and 13
Strengthening our framework
We continue to enhance and embed the global risk management
framework which aims to mature our process. This improves consistency
across the markets where we operate and provides the appropriate level
of oversight for the different risk types.
Over the course of the year, we have:
–
Improved our process for the identification and assessment of
emerging risks
(see section above);
–
Updated our approach in determining
risk tolerance
and the process
to manage risks which are outside of our tolerance level;
–
Increased the frequency of
reporting
to our governance committees
using a more agile approach, so that risks can be better monitored
and
{
appropriate treatment actions can be implemented; and
–
Continued to align with the TCFD recommendations for
climate-related
risks and opportunities.
Risk management (continued)
65
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
The preparation of the LTVS includes an assessment of the Group’s
long-term prospects in addition to an assessment of the ability to meet
future commitments and liabilities as they fall due over the three-year
review period.
Assessment of viability
The Board has chosen a three-year period to assess Vodafone
Group’s
{
viability, a period in which we believe our principal risks
tend
{
to
{
develop. This time horizon is also in line with the structure of
long-term management incentives and the outputs from the long range
business planning cycle. We continue to conduct financial stress testing
and sensitivity analysis, considering revenues at risk as well as the impact
of our response plan to the crisis.
The assessment of the viability started with the available headroom as
of
{
31 March 2022 and considered the plans and projections prepared
as
{
part of the forecasting cycle, which include the Group’s cash flows,
planned commitments, required funding and other key financial ratios.
We also assumed that debt refinance will remain available in all plausible
market conditions.
Finally, we estimated impact of severe but plausible scenarios for
all
{
of
{
our principal and emerging risks on the three-year plan and,
in
{
addition, stress tested a combined scenario taking into account the
risk
{
interdependencies as defined on the diagram on page 60, where
the
{
following risks were modelled as materialising in parallel over the
three-year period:
Cyber threat:
A cyber-attack exploits vulnerabilities allowing access to
IT
{
and network systems, leading to breach in information and a GDPR
fine. The cyber threat level increased as a result of geopolitical tension.
Supply chain disruption:
Disruptions brought on by logistic challenges
and supplier price increases, due to the volatile geopolitical environment
(including the war in Ukraine).
Adverse changes in macroeconomic conditions:
A global
economic crisis resulting in reduced telco spending from businesses
and
{
consumers, increased inflation, as well as limited access to financial
markets and availability of liquidity.
Assessment of prospects
Assessment of viability
Outlook, strategy & business model
Outlook of possible long-term scenarios expected in the sector and the Group’s current position to face them
Assessment of the key principal risks that may influence the Group’s long-term prospects
Articulation of the main levers in the Group’s strategy and business model ensuring the sustainability of value creation
Long Range Plan
is the three-year forecast approved by the Board on an annual basis, used to calculate cash position and headroom
Headroom
is calculated using cash, cash equivalents and other available facilities, at year end
Sensitivity analysis
to assess the level
of
{
decline
{
in performance that the Group
could
{
withstand, were a
black swan
event
{
to
{
occur
Severe but plausible scenarios modelled
to
{
quantify the cash impact of an
individual
{
principal risk
materialising
over
{
the
{
three-year period
Quantification of the cash impact of
combined
{
scenarios
where multiple risks
materialise across one or more markets,
over
{
the
{
three-year period
Viability
results from comparing the cash impact of severe but plausible scenarios on the available headroom, considering additional liqu
idity options
Long-term viability statement
Disintermediation:
A continued and uninterrupted growth of technology
giants and new entrants could impact our business revenue and overall
financial performance.
Assessment of long-term prospects
The Board undertakes a robust review and challenge of the strategy and
assumptions. Each year the Board conducts a strategy session, reviewing
the internal and external environment as well as significant threats and
opportunities to the sustainable creation of long-term shareholder value
(note that known emerging threats related to each principal risk are
described on pages 60 to 63).
As an input to the strategy discussion, the Board considers the principal
risks (including Cyber threats, Supply chain disruption, Adverse changes
in macroeconomic conditions, and Disintermediation) with the focus
on
{
identifying underlying opportunities and setting the Group’s future
strategy. The output from this session is reflected in the strategic section
of the Annual Report (pages 10 to 13), which provides a view of the
Group’s long-term prospects.
Conclusions
The Board assessed the prospects and viability of the Group in
accordance with provision 31 of the UK Corporate Governance Code,
considering the Group’s strategy and business model, and the
{
principal
risks to the Group’s future performance, solvency, liquidity and reputation.
The assessment takes into account possible
{
mitigating
{
actions available
to management were any risk
{
or
{
combination of risks to materialise.
Cash and cash equivalents available of €7.5bn (page 176) as of
31
{
March
{
2022, along with options available to reduce cash outgoings
over the period considered, provide the Group with sufficient positive
headroom in all scenarios tested. Reverse stress testing on revenue and
EBITDA over the review period confirmed that the Group has sufficient
headroom available to face uncertainty. The Board deemed the stress
test conducted to be adequate and therefore confirm that they have a
reasonable expectation that the Group will remain in operation and be
able to meet its liabilities as they fall due up to 31 March 2025.
Long-term viability statement
Directors confirm that they have reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the three-year period
Sensitivity analysis
Principal risks
Combined scenario
Strategic report
Governance
Financials
Other information
66
Vodafone Group Plc
Annual Report 2022
We recognise that climate change poses a
number
b
of
b
physical (i.e. extreme weather events)
and
b
transition-related (i.e. related to moving to a
greener economy) risks and opportunities for our
business. As part of our commitment to operate
ethically and sustainably, we
b
strive to understand
climate-related risks and opportunities and embed
responses to these into our
b
business strategy and
operations. We have been
b
aligning our internal
processes with the recommendations of the
Task
b
Force on Climate-related Financial Disclosures
(
ȁ
TCFD’) for the last three
b
years and will continue
to
b
enhance our policies,
b
processes and reporting
with
b
respect to the
b
TCFD recommendations.
Our
b
progress is summarised in this section.
TCFD recommendations
We are fully compliant with eight out of 11 TCFD recommendations for
the year ending 31 March 2022. There are certain recommendations,
listed below, where we are currently only partially compliant:
–
Strategy (financial planning):
The majority of the identified
material
{
climate-related risks could impact us most significantly in
the
{
medium to long term, whereas our current financial planning cycle
extends out to five years. As a result, we do not currently fully disclose
impacts of climate-related risks and opportunities in the context of
financial planning.
–
Metrics and targets (physical risks):
We currently disclose metrics
and targets related to the climate-related transition risks as Planet is
one of three purpose pillars. The physical climate-related risks that we
have identified are more likely to materialise over the longer term and
are therefore more difficult to model. As a result, we do not currently
disclose metrics and targets related to physical risks but we continue to
work on improving the quality and quantity of data to address the gaps.
As industry practices evolve and our internal programme matures we will
address the gaps in our climate-related risk management approach.
TCFD reporting
Similar to last year’s disclosure, we have once again published our
comprehensive TCFD disclosure in a standalone report. This enables us
to
{
provide more detailed information for investors and other interested
stakeholders in a more accessible format.
Click to read our TCFD report:
investors.vodafone.com/tcfd
Governance
Our strategy is approved by the Board which has reviewed Vodafone’s
purpose and Planet commitments to reduce our environmental impact,
such as reaching ‘net zero’ emissions by 2040. The Board’s Audit and Risk
Committee has oversight of our climate-related risks and opportunities.
In
{
addition, the Board established an ESG Committee in 2021 to provide
oversight of the broader ESG strategy.
Read more about the ESG Committee
on pages 89 to 90
The Chief External and Corporate Affairs Officer, a member of the
Executive Committee, is the sponsor for the Planet agenda as part of our
purpose-led strategy and has overall accountability for climate change
action within the Group. This includes providing updates to the Board on
the progress towards our climate-related goals. The Chief Technology
Officer is responsible for the overall management of the physical risks
to
{
Vodafone due to the nature of our business.
TCFD disclosure
Task Force on Climate-related Financial Disclosures
Progress
Governance
a.
Describe the board’s oversight of climate-related risks
and opportunities
b.
Describe management’s role in assessing and
managing climate-related risks and opportunities
Strategy
a.
Describe the climate-related risks and opportunities
the organisation has identified over the short, medium
and long term
b.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning
c.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
Risk Management
a.
Describe the organisation’s processes for identifying
and assessing climate-related risks
b.
Describe the organisation’s processes for managing
climate-related risks
c.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management
Metrics and Targets
a.
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process
b.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks
c.
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
Key
Compliant with the TCFD recommendations
Partially compliant with the TCFD recommendations
C
PC
TCFD recommendations
We have considered our ‘comply or explain’ obligation under the UK’s
Financial Conduct Authority Listing Rules and have detailed in the
table below the 11 TCFD recommendations with which we fully or
partially comply with.
Progress
Progress
Progress
C
C
C
C
C
C
C
C
PC
PC
PC
67
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
In addition, at the 2020 AGM shareholders approved the current
Remuneration Policy which incorporates our ESG priorities in the
executive long-term incentive plan. For FY22, this measure included a
specific greenhouse gas reduction ambition linked to our 2025 target
of
{
reducing our emissions by 50% from a FY17 baseline.
Read more about the Remuneration Report on
pages 99 to 112
Strategy
This year, we undertook an exercise to refresh the top climate-related
risks and opportunities assessment to ensure we are incorporating
any
{
changing climate trends or science, as well as new risks and
opportunities. The exercise confirmed that the identified risks and
opportunities remain largely unchanged from the previous assessment,
although some require more attention in the short term due to the
macroeconomic environment.
In 2020, we adopted three scenarios in line with the Bank of England’s
reference climate scenarios, as outlined in their consultation document
released in December 2019. We used the outputs of the high-level
impact
{
analysis for all material climate-related risks identified in the
three
{
different scenarios and over different time horizons to better
understand the potential impact on our business.
This year, we built on our previous climate scenario work and considered
our resilience against key climate-related risks and opportunities. We
engaged the relevant stakeholders from across the business to understand
and/or monitor the current processes and policies which enable us to
mitigate or monitor climate-related risks and capture climate-related
opportunities. For each material risk and opportunity, we mapped the
current controls in place and the strength of those controls. Overall,
we
{
have controls in place for all identified key risks and this helps build
resilience against the potential impacts on the business.
Physical risks are assessed and considered throughout the critical
stages
{
of the asset lifecycle. Environmental risks are assessed ahead
of
{
the acquisition of buildings and network equipment. We have teams
and processes dedicated to disaster recovery and business continuity.
In
{
addition, we mitigate the financial impact of physical risks through
insurance and damage response. Our broader Planet strategy, targets
and
{
external communications are designed to manage and mitigate
the
{
potential impacts of transition risks on the Group. We have specialist
teams who monitor and drive progress to maintain and meet expectations
from key stakeholders such as customers, suppliers and broader society.
Similarly, harnessing our current climate and ESG strategy and monitoring
market trends will enable us to also capture opportunities arising from the
low-carbon transition.
Read more about how our products and services help
our
b
customers reduce their emissions on page 43
To continue our TCFD programme, we will conduct a pilot study looking
at our physical climate risk for a number of our key assets to allow for a
better understanding and quantification of our exposure to physical risks.
Risk management
Continued alignment of our climate-related risk management
process
{
with our global risk management framework is a priority
activity.
{
Climate
{
change was discussed and considered during the
principal risk assessment process and it was placed on our risk watchlist.
Read more about our risk management framework
on pages 59 to 60, 64
To ensure a robust assessment of climate-related risks and opportunities
we used the following data sources:
–
Climate-change publications and data;
–
Guidance from the TCFD on potential risks and opportunities;
–
Previous year’s assessments; and
–
Key stakeholders’ inputs via a survey.
We evaluated the materiality of the identified risks and opportunities by
assessing their likelihood and impact using our global risk management
framework. This process helped us determine the relative significance of
the climate-related risks in relation to other risks.
Due to the nature of the topic, there are many teams across Vodafone
that are responsible for managing climate-related risks and we have
multiple processes and policies in place to ensure we are managing them
effectively. This year, we mapped the key risk and control owners for the
material climate-related risks and opportunities.
Metrics and targets
We use a wide variety of metrics to measure the current and potential
impacts of climate-related risks. We have been measuring and reporting
on energy and carbon emissions since 2001 and have been responding
to CDP’s climate change questionnaire since 2010. Our main carbon
emissions metrics are also subject to independent limited assurance. In
addition, we have set a number of targets to manage climate-related risks
and reduce our impact on the environment, such as reaching ‘net zero’
emissions across our full value chain by 2040 and purchasing 100%
renewable electricity in all markets by 2025. From July 2021, our
European network is already 100% powered by electricity from
renewable sources.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
We constantly seek to refresh and improve our metrics and key risk
indicators to better measure and manage climate-related risks and
opportunities. We recognise that we need to further mature in this
area
{
as
{
industry practices and good-quality data become available.
Read more about our existing environmental KPIs
on pages 5, 41 to 43
Material climate-related risks and opportunities
Physical risks:
–
Damage to infrastructure caused by increasing frequency and severity
of extreme weather events, including wildfires, flooding, and storms
–
Damage to infrastructure caused by sea level rise
–
Interruption or reduction in the quality of our wireless services due
to increased precipitation
Transition risks:
–
Changing consumer preferences impacting our revenues and
market share
–
Increasing energy consumption due to increased global temperatures
–
Changing cost of carbon impacting costs to meet our net zero target
–
Increasing risk of litigation around climate action
–
Increase in carbon taxation
–
Changes in regulation over infrastructure efficiency
–
Increasing scrutiny from investors and failure to meet
environmental targets impacting reputation
–
Third-party dependency impacting our ability to meet carbon
targets and improve efficiencies
Opportunities:
–
Improvement in market valuation as a result of changing investor
expectations with regard to climate change and our broader
ESG
{
performance
–
Improvement in
access to capital due to our sustainability performance
–
Increasing consumer attractiveness and ability to meet net zero
targets through increased energy efficiency and enablement
qualities of products and services
–
Reduced costs through sustainable procurement
Strategic report
Financials
Other information
68
Vodafone Group Plc
Annual Report 2022
Governance
Our Board
Leadership, governance and engagement
Governance at a glance
Membership and attendance
The table below details the Board and Committee meeting attendance
during the year to 31 March 2022. The number of attendances is shown
next to the maximum number of meetings the Director was entitled to
attend. Ad hoc meetings of the Board and its Committees were also held
as required during the year.
Name Board
Nominations and
Governance
Committee
Audit and Risk
Committee
Remuneration
Committee
ESG
Committee
Sanjiv Ahuja
1/1
–
1/1
–
–
Sir Crispin Davis
6/7
1
4
/
4––
–
Margherita
Della
{
Valle
7/7
–
–
–
–
Michel Demare
7/7
2/2
5/5
5/5
–
Dame Clara Furse
7/7
–
–
5/5
2/2
Valerie Gooding
7/7
4/4
–
5/5
2/2
Renee James
2/2
2/2
–
2/2
–
Deborah Kerr
1/1
–
1/1
–
–
Amparo Moraleda
7/7
–
5/5
–
2/2
David Nish
7/7
–
5/5
–
–
Nick Read
7/7
–
–
–
–
Jean-François
van
{
Boxmeer
7/7
3/3
–
–
–
Note:
1.
Sir Crispin Davis was unable to attend one scheduled meeting of the Board due to ill health.
Board evaluation
Progress in the year
The 2022 Board evaluation reported
improvements had been achieved in:
–
Review of strategy and focus on
strategic
{
priorities;
–
Better aligned metrics and reporting; and
–
Improved discussion of people and culture.
Actions for coming year
–
Recruit Non-Executive Directors with
telecoms and technology experience.
–
Use small Board groups to focus on
particular topics.
–
Track progress on project execution with
timelines and milestones.
Read more
on page 79
Tenure
3
4
3
7-10 years
3
7-10 years
3
0-3 years
4
4-6 years
3
0-3 years
4
4-6 years
3
Gender diversity
50%
Female 5
Female 5
Male 5
Male 5
Independence
1
7
2
Independent 1
NED Chair
Independent 1
NED Chair
Independent
7
Executive
2
Independent
7
Executive
2
4
5
4
1
4
2
Political/
Regulatory
Technology/
Telecom
Media
Emerging
markets
Finance
Consumer
goods and
services/
Marketing
Skills and expertise of Non-Executive Directors
Scan or click to watch our Chairman, Jean-François
van Boxmeer, share his views on
b
Vodafone:
investors.vodafone.com/videos
1
1
2021
2020
2019
2018
2017
2016
2015
2014
2013
2022
1
Ethnically diverse
Ethnically diverse
White
White
Ethnicity
11
10
11
10
11
13
12
11
11
10
2
1
1
11
1
2
Senior Board positions
Chair
Chief
Executive
Senior
Independent
Director
Chief Financial
Of
ż
cer
Note:
As at 31 March 2022
Note:
1.
Following an unexpected resignation during the year, it is disappointing that we do not currently
meet
{
the Parker Review target, however this does not fairly reflect our long-standing commitment to
diversity. We continue to take practical and purposeful steps towards enhancing the Board’s diversity.
The Nominations and Governance Committee regularly reviews the Board’s composition
with a view to
b
ensuring
b
a diverse mix of
b
backgrounds, skills, knowledge and experience as well
as deep expertise in
b
technology and telecommunications. Each year, the Board monitors and
improves its performance by
b
conducting an annual performance review.
Strategic report
Governance
Financials
Other information
69
Vodafone Group Plc
Annual Report 2022
Audit and Risk Committee
The Committee oversees the Group’s financial reporting, risk
management, internal control and assurance processes and the
external
{
audit. This includes in-depth reviews of our principal risks,
the
{
review of
{
our Annual Report and a programme of deep-dives across
multiple business units with a focus on the risk and control environment.
The Committee also monitors the activities and effectiveness of the
Internal
{
Audit function and has primary responsibility for overseeing
the
{
relationship with the external auditor. Deep-dive topics this year were
undertaken in cyber threats and information security, privacy and supply
chain resilience. Entity deep-dives included Vodafone Business, Vantage
Towers, Vodafone Germany, Vodafone Egypt and our shared services
centres (_VOIS).
Read more
on pages 83-88
Recent and prospective appointments
Deborah Kerr was appointed to the Board as a Non-Executive Director
on
{
1 March 2022. Deborah brings a wealth of technology expertise
across
{
a range of sectors and her knowledge and strategic insights on
the
{
technology market provide invaluable experience to the Board as
Vodafone continues its evolution into a new generation connectivity
and
{
digital services provider. MWM Consulting was engaged as search
consultants and an overview of the appointment process is shown below.
STEP
1
A detailed role specification was formulated with strong
experience in the technology sector a key focus following
the
{
departure of a long standing Board member
STEP
2
A list of potential candidates from diverse backgrounds
was
{
produced
STEP
3
Interviews took place with Committee members and the
Chief
{
Executive, Nick Read
STEP
4
The Committee agreed the preferred candidate for
recommendation to the Board
In May, we announced that Stephen Carter, Delphine Ernotte Cunci
and
{
Simon Segars will be joining the Board as Non-Executive Directors
following the Company’s AGM on 26 July 2022, subject to shareholder
approval. Stephen brings a track record of value creation and has
extensive commercial and regulatory experience in the telecoms and
media sectors. Delphine has considerable experience
{
in the telecoms
sector and, more recently, in media and
{
technology. Simon brings
significant experience and insights on technology trends and how these
are reshaping industry landscapes.
Scan or click to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role:
investors.vodafone.com/videos
Committee activities
Nominations and Governance Committee
In addition to keeping under review developments in corporate
governance and the Company’s responses to them, the Nominations
and
{
Governance Committee makes recommendations to the Board
about Board composition and ensures Board diversity and the necessary
balance of skills. The Committee recognises the need to anticipate the
skills and attributes that will be needed on the Board as the Company
develops. In light of several Board changes in recent years and the
scheduled retirement of a number of Directors in the next several years,
the Committee is currently undertaking a process to find and appoint
directors with telecoms and technology sector experience.
Read more
on pages 80-82
Scan or click to watch the Chair of the ESG Committee,
Amparo Moraleda, explain her role:
investors.vodafone.com/videos
ESG Committee
The Committee provides oversight of Vodafone’s ESG programme:
Purpose (Inclusion for All; Planet; and Digital
{
Society), sustainability and
responsible business practices as well as Vodafone’s contribution to the
societies we operate in under the social contract. The Committee also
monitors progress against key performance indicators and external
ESG
{
index results. Focus this year centred on establishing the governance
arrangements for the Committee, including the Terms of Reference and
standing agenda items to reflect the Committee’s purpose. Key discussion
topics included carbon enablement, Digital4Green, device lifecycle
management and the external ESG context.
Read more
on pages 89-90
Scan or click to watch the Chair of the
Audit Committee, David Nish, explain his role:
investors.vodafone.com/videos
Remuneration Committee
The Remuneration Committee sets, assesses and recommends for
shareholder approval the Remuneration Policy for Executive Directors,
sets the remuneration of the Executive Directors and approves the
remuneration for the Chair of the Board and members of the Executive
Committee. It also reviews remuneration arrangements across the Group
to ensure they are aligned with our strategy, support our purpose and
celebrate the ‘Spirit of Vodafone’.
Fair pay principles:
1. Market competitive
4. Share in our successes
2. Free from discrimination
5. Provide benefits for all
3. Ensure a good standard of living
6. Open and transparent
96%
shareholder support for the current Remuneration Policy
Read more
on pages 91-112
To operate efficiently and to ensure matters are given the right level of focus, the Board delegates
some
b
of
b
its
b
responsibilities to its Committees. These provide focused oversight on: Board composition,
performance, and
b
succession planning

financial reporting, internal processes and controls

remuneration
b
practices

and
b
environmental, sustainability and governance topics.
Strategic report
Financials
Other information
70
Vodafone Group Plc
Annual Report 2022
Governance
Strong and robust corporate governance is integral
to
b
supporting our continued strategy execution,
business resilience and contribution to the societies
in
b
which we operate.
Dear shareholders,
I am pleased to present the Corporate Governance Report for the year
ended 31 March 2022 on behalf of the Board.
The year in review
The restrictions imposed by the COVID-19 pandemic have continued to
impact the societies in which we operate this year and, with the backdrop
of the war in Ukraine, reinforced the immense value of connectivity that
Vodafone provides. We take seriously our commitment to strong and
robust corporate governance to support the creation of long-term
sustainable value for the benefit of all our stakeholders. Although Board
and Committee meetings have taken place both in person and virtually
this year in accordance with the government guidance in place at the
time, we have continued to adapt quickly to the hybrid world to ensure
the highest standards of corporate governance remain embedded
throughout the Company.
I am grateful to my fellow Directors, the executive team, and the people of
Vodafone for their support, flexibility, and strong spirit throughout another
disrupted year.
This report provides an insight into the activities of the Board and
Committees over the year and how corporate governance underpins
and
{
supports our business and the decisions we make.
Digital ambitions
As described in the Strategic Report, digital connectivity infrastructure and
technologies continue to revolutionise the way in which our economies
and societies function. The Board remains committed to driving forward
these digital ambitions as part of our strategy to enable the societies we
operate in to remain competitive for the future.
Read more about our digital ambitions
on pages 6, 44-45
Board succession and diversity
This year, the Board, together with the Nominations and Governance
Committee has continued to focus on succession planning. We reported
last year that Renee James would not be seeking re-election as a
Non-Executive Director at the 2021 Annual General Meeting (‘AGM’)
having reached the recommended tenure threshold. Sanjiv Ahuja also
stepped down as a Non-Executive Director with effect from the same date
having decided to pursue other business interests. In September 2021,
Olaf Swantee stepped down as a Non-Executive Director when a potential
conflict of interest arose. Following these Director changes, we have
actively engaged with two search consultancies to ensure the Board
has
{
the necessary skills, knowledge, experience and diversity to deliver
superior performance and enhance the success of the Company.
I am delighted that following a thorough search process Deborah Kerr
joined the Board on 1 March 2022 as a Non-Executive Director. Deborah’s
knowledge and strategic insights on the technology market will be an
excellent addition to the Board and Audit and Risk Committee.
Read more about the appointment process
on page 69
A full induction programme is underway for Deborah, including meetings
with executives leading our businesses and functions. The programme will
run throughout FY23.
In May, we announced that Stephen Carter, Delphine Ernotte Cunci and
Simon Segars will be joining the Board as Non-Executive Directors following
the Company’s
AGM on 26 July 2022, subject to shareholder approval. They
are well-respected leaders who bring extensive experience and track records
of value creation across the telecoms, technology and media sectors.
A
{
full
{
induction programme will also be
{
implemented during FY23.
We are anticipating several scheduled retirements from the Board over
the next two years. We expect to bring on to the Board new Directors with
telecoms or technology sector experience. I look forward to updating you
on our progress in my report next year.
We remain committed to having a Board that is diverse in all respects. We
meet the FTSE Women Leaders Review targets in that at least 40% of the
Board is composed of women and our Senior Independent Director and
our Chief Financial Officer are women. Having had a non-white Director
on
{
the Board for 18 consecutive years until July 2021 when Sanjiv Ahuja
stepped down, it is disappointing that currently we do not meet the
Parker
{
Review target to have at least one Director from a non-white
ethnic minority. We strongly believe that these diversity targets are
not
{
just an end goal, but a continuous journey. Our long-term ambition
is
{
to
{
increase diversity on our Board, in all its forms, to ensure a wider
representation of the society in which we operate.
Read more about our refreshed Board Diversity Policy
on page 81
We have also introduced a new ethnic diversity target that 25% of the global
senior leadership will come from ethnically diverse backgrounds by
{
2030.
Read more
on pages 39-40
Stakeholder engagement
We recognise that Vodafone’s success is dependent on the Board taking
decisions for the benefit of our shareholders and in doing so having regard
to all our stakeholders.
Throughout the year, our Directors have interacted with institutional
shareholders and received updates on the three investor perception
studies completed during the year.
Read more
on pages 14-15
The 2021 AGM was held at Vodafone UK’s headquarters in Newbury,
Berkshire and was also available to watch live via a webcast for
{
those
shareholders who were unable to attend in person due to the COVID-19
government guidance. Shareholders were also able
{
to pre-submit
questions for consideration by the Directors at the meeting.
Click to read more about the AGM:
vodafone.com/agm
This year we have continued with our chosen workforce engagement
approach, with Valerie Gooding serving as our designated Workforce
Engagement Lead. Valerie met with a number of employee consultative
committees across our European and African markets. Key discussion
topics from the meetings this year included Future Ready ways of working,
response to COVID-19 and the progress on Vodafone’s Fair Pay
{
agenda.
The Board is committed to understanding the views of all of Vodafone’s
stakeholders to inform the decisions that we make.
Read more
on pages 14-15
We remain committed to the highest standards
of
{
corporate governance
Chairman’s governance statement
Strategic report
Governance
Financials
Other information
71
Vodafone Group Plc
Annual Report 2022
Compliance with the 2018 UK Corporate
Governance
{
Code (the ‘Code’)
In respect of the year ended 31 March 2022 Vodafone Group Plc
was
{
subject to the Code (available from www.frc.org.uk). The Board is
pleased to confirm that Vodafone applied the principles and complied
with all the provisions of the Code throughout the year. Further
information on compliance with the Code can be found as follows:
Board leadership and Company purpose
Long-term value and sustainability
Culture
Shareholder engagement
Other stakeholder engagement
Conflicts of interest
Role of the Chairman
Division of responsibilities
Non-Executive Directors
Independence
Composition, succession and evaluation
Appointments and succession planning
Skills, experience and knowledge
Length of service
Evaluation
Diversity
Audit, risk and internal control
Committee
Integrity of financial statements
Fair, balanced and understandable
Internal controls and risk management
External auditor
Principal and emerging risks
Remuneration
Policies and practices
Alignment with purpose, values and long-term strategy
Independent judgement and discretion
Purpose and the ‘Spirit of Vodafone’
Our purpose ‘We connect for a better future’ is at the core of our strategy,
enabling inclusive and sustainable digital society. It has guided actions at
every level throughout the year.
Read more
on pages 36-58
The Board understands the importance of culture and setting the tone
of
{
the organisation from the top and embedding it throughout the Group.
We refer to our culture as the ‘Spirit of Vodafone’. It is a key component
for our strategic, organisational and digital transformation. The aim of our
people strategy is to create an environment where growing never stops
and everyone can truly belong, innovate, and fulfil their potential. Our
first
{
quarterly ‘Spirit of Vodafone’ day took place in October 2021 and
was
{
designed to provide dedicated space for personal growth, wellbeing
and connection. Following the success of this initiative, further ‘Spirit of
Vodafone’ days have been scheduled.
Read more about our culture and people strategy
on pages 21-23
The Board receives regular updates on employee engagement and the
‘Spirit of Vodafone’, which enables it to make more informed decisions
where appropriate.
Board evaluation
This year the Board undertook an external evaluation in order to build on
the recommended actions from last year. I am pleased the report shows
that your Board continues to operate effectively.
Read more
on page 79
ESG Committee
In 2021, the Board established an ESG Committee which met twice in the
year. The Committee has noted that Vodafone’s approach to ESG is part
of its growth strategy and a driver of commercial success. The approach
is
{
forward-looking, focused on long-term value and brings together
five
{
elements:
1.
Vodafone’s purpose and the actions Vodafone takes to fulfil its Digital
Society, Inclusion and Planet agenda;
2.
Vodafone’s social contract work;
3.
Responsible business practices which ensure Vodafone operates to the
highest standards of integrity and ethics;
4.
Transparency, including providing correct disclosures and reporting on
all aspects of ESG; and
5.
Measurement, so that Vodafone’s performance is measured in ways
that meet the information requirements of various stakeholders.
The year ahead
The Board will continue to drive for better returns for shareholders and
will monitor the Company’s progress on the execution of Vodafone’s
strategy. It will keep the Group’s strategy under review, adapting it to
anticipate or respond to opportunities and risks in the markets in which
we operate. Also, through the work of the Board’s Committees, the Board
will develop the Board’s composition, will continue to oversee financial
reporting and the effectiveness of internal controls, will review the
Company’s remuneration policy and will track progress on ESG strategy.
Jean-François van Boxmeer
Chairman of the Board
Scan or click to watch our Chairman, Jean-François
van Boxmeer, share his views on
b
Vodafone:
investors.vodafone.com/videos
Disclosure Guidance and Transparency Rules
We comply with the Corporate Governance Statement requirements
pursuant to the FCA’s Disclosure Guidance and Transparency Rules
by
{
virtue of the information included in this
p
Governance
q
section
of
{
the Annual Report together with information contained in the
‘Shareholder information’ section on pages 234 to 239.
14-15
70-71
14-15
81
76
68
69
68
73-74
68
73-74
79
68
81
68
38-39
83-84
118
84-85
65
117-118
84
86-87
87
86
59-67
91-95
91-112
101
92
65
34-55
21-22
47
Read more
Read more
Read more
Read more
22
76
73-74
80
Read more
Strategic report
Financials
Other information
72
Vodafone Group Plc
Annual Report 2022
Governance
Our Company purpose, values, and culture
Purpose
At Vodafone, our purpose is to connect for a better future by enabling
inclusive and sustainable digital societies and it is supported by our three
purpose pillars: Inclusion for All, Planet and Digital Society. Our purpose
is
{
championed by our Board, which is collectively responsible for the
oversight and long-term success of the Company. It is aligned with
our
{
culture and strategy, placed at the forefront of our decision-making
and
{
strategy development, and the Board considers how the initiatives
progressed by management throughout the year have advanced our
purpose. Board oversight ensures that continued product development
realises our ambition to connect for a better future.
Read more about our purpose
on pages 36-40
Strategy
The Board monitors the Company’s progress against established strategic
objectives and performance against competitors. Board meetings are
planned with reference to the Company’s strategic priorities and meeting
agendas are constructed to deliver information at appropriate junctures,
and from a broad range of management, to enable the Board to
effectively review and challenge.
Read more on the evolution of our strategy
on pages 16-23
Values and culture
The Board has a critical role in setting the tone of our organisation
and
{
championing the behaviours we expect to see throughout the
Group.
{
The ‘Spirit of Vodafone’ aligns with our purpose and strategy,
which ultimately leads to a more motivated and productive workforce.
The Board has continued to influence and monitor culture throughout
the year and receives regular updates on the Spirit of Vodafone initiatives,
including the Spirit Beat survey and additional pulse surveys. The Chief
Executive, Nick Read also provides regular updates to our people on the
outcomes of the surveys.
The cultural climate in Vodafone is measured through a
{
number of
mechanisms including policy and compliance processes, internal
audit
{
and formal and informal channels for employees to raise
concerns
{
(including our bi-annual people survey and our whistleblowing
programme, Speak Up, which is also available to the contractors and
suppliers working with us). The Board is appraised of any material
whistleblowing incidents.
Alongside these mechanisms, the Board remains committed to
engagement with the workforce and these opportunities continue to
shape how the Board influences and understands culture. The Board
receives regular updates from Valerie Gooding, the designated Workforce
Engagement Lead.
Read more about Speak Up
on page 47
Governance
The Board ensures the highest standard of corporate governance is
maintained by regularly reviewing developments in governance best
practice and ensuring that these are adopted by the Company.
The Board dedicated time during the year to thoroughly consider the
independence and time commitment of all Directors, the arrangements
in
{
place to monitor conflicts of interest, as well as evaluating the
effectiveness of the
{
Board and each of the Directors.
All Directors have access to the advice of the Company Secretary,
who
{
is
{
responsible for advising the Board on all governance matters
and
{
ensuring the Board has access to the necessary policies, processes
and resources required to operate efficiently and effectively.
Read more about our governance structure and roles
and
b
responsibilities on pages 75-76
Governance
Employee engagement
Throughout the year we have used several employee engagement
methods and communication channels between the Board, the Executive
Committee, and our workforce. This enabled meaningful engagement to
continue this year throughout periods of COVID-19 restrictions.
Examples of our workplace interactive sessions include:
Interactive session
Topic
Stay Connected: Chief Executive,
Diversity
{
&
{
Inclusion (D&I) Initiatives
D&I
Discussion focus:
The Chief Executive was joined by the Head of Network
Engineering Spain and the Group’s Head of Culture and Inclusion to hear
about
{
diversity initiatives underway in and outside of Vodafone in the lead
up
{
to
{
International Women’s Day 2022.
We Connect: Chief Executive and
Executive
{
Committee
Our business
Discussion focus:
The Chief Executive was joined by his Executive Committee
colleagues to discuss the Company’s future as a new generation connectivity
and
{
digital services providers.
We Connect: Together We Can, brand repositioning
Brand
Discussion focus:
The Chief Executive was joined by the Group Chief
Commercial
{
Operations & Strategy Officer to announce the launch of our new
brand positioning, combining the human spirit with the power of technology
to
{
find out what that really means for society. As the financial year came to a
close, the Chief Executive and the Executive Committee thanked employees for
the their efforts in keeping our customers connected, and in helping us to enable
an inclusive and sustainable digital society.
Chief Executive and Chief Financial Officer
financial year
{
results
Our business
Discussion focus:
The Chief Executive was joined by the Chief Financial Officer to
discuss Financial Year
{
Results, with links to the press release as they talk to our
investors. The Chief Executive also thanked employees for their continuous hard
work and support through such an unprecedented year.
Stay Connected with the Chief Executive
and
{
Chairman
Our business
Discussion focus:
The Chief Executive was joined by the Chairman of Vodafone.
The session delved into his previous experience, what he has learned about
Vodafone and his views on our strategy.
Global Pride Webinar
D&I
Discussion focus:
The Chief Executive, the Chief Human Resources Officer and
the
{
rest of the
{
Executive Committee were joined by our Global LGBT+ Executive
Sponsor and a number of guest speakers as we celebrated Pride with
{
our
{
Global
Pride Webinar. The session covered a range of topics including the decriminalising
of same sex relationships in India, the #holdinghands initiative in the Czech Republic,
being accepted for who you are, active allyship, and advertisements introducing
LGBT+ couples.
Black History Month
D&I
Discussion focus:
The Chief Human Resource Officer was joined by external
speakers and our colleagues to celebrate Black History Month, where we
recognised Black history and the achievements of Black people past and present.
Discussion included how employees can take this opportunity to see how they
can get involved in working towards Race, Ethnicity, Culture and Heritage (REACH)
inclusion and creating an anti-racist workplace – learning more and becoming an
ally, or completing our Withstander Training.
We Connect with the Chief Executive,
the
{
Chief
{
Human Resources Officer and
the
{
Group
{
Strategy Director
Strategy/
transformation
Discussion focus:
The Chief Executive was joined by the Group Chief HR Officer
and Group Strategy Director to discuss strategy.
Strategic report
Governance
Financials
Other information
73
Vodafone Group Plc
Annual Report 2022
Our Board
Our business is led by our Board of Directors.
Biographical details of the Directors as at
17
b
May
b
2022 are provided below.
Click to
ȣ
nd full biographical information for the Directors:
vodafone.com/board
External appointments listed are only those required to
{
be disclosed
pursuant to Listing Rule 9.6.
Jean-François van Boxmeer
N
Chairman – Independent on appointment
Tenure:
1 year
Skills and experience:
Jean-François brings to the Vodafone Board his extensive international
experience in
{
driving growth through both business-to-business and
business-to-consumer business models and in-depth knowledge of the
countries in which Vodafone operates. Jean-François is highly regarded
as
{
having been one of the longest standing and most successful CEOs
in
{
Europe. He was the Chief Executive of Heineken for 15 years, having
been with the company for 36 years. Jean-François held a number of
senior roles in Africa and Europe before joining Heineken’s Executive
Board in 2001 with worldwide responsibility for supply chain and
technical services, as well as regional responsibility for the operating
businesses in North-West Europe, Central and Eastern Europe and
Sub-Saharan Africa.
External appointments:
–
Heineken Holding N.V., non-executive director
Note:
Jean-François is currently non-executive lead at Mondelez International Inc., but will not stand for
re-election as a director at the AGM on 18 May 2022.
Nick Read
Chief Executive – Executive Director
Tenure:
3 years (as Chief Executive)
Skills and experience:
As Chief Executive, Nick combines strong commercial and operational
leadership with a
{
detailed understanding of the telecoms sector and its
opportunities and challenges.
Prior to becoming Chief Executive in October 2018, Nick served as Group
Chief Financial Officer from April 2014, and held a variety of senior roles
including Chief Executive for Africa, Middle East and Asia-Pacific for five
years and Chief Executive of Vodafone UK. Prior to joining Vodafone, he
held senior global finance positions with United Business Media Plc and
Federal Express Worldwide.
External appointments:
–
Booking Holdings Inc., non-executive director and member of the
audit
{
committee
Margherita Della Valle
Chief Financial Officer – Executive Director
Tenure:
3 years
Skills and experience:
Margherita brings considerable corporate finance and accounting experience
to the Board. She was Deputy Chief Financial Officer from 2015 to 2018,
Group Financial Controller from 2010 to 2015, Chief Financial Officer
of
{
Vodafone’s European region from 2007 to 2010 and
{
Chief Financial Officer
of Vodafone Italy from 2004 to 2007. Margherita joined Omnitel Pronto I
ta
li
a
in Italy in 1994 and held various consumer marketing positions in business
analytics and customer base management before moving to finance.
Omnitel was acquired by Vodafone in 2000.
External appointments:
–
Reckitt Benckiser Group plc, non-executive director and member of the
audit committee
Valerie Gooding CBE
Senior Independent Director and Workforce Engagement Lead
Tenure:
8 years
Skills and experience:
Valerie brings a wealth of international business experience obtained at
companies with high levels of customer service including British Airways
and as chief executive of BUPA which, together with her focus on leadership
and talent, is valuable to Board discussions.
Sir Crispin Davis
N
Non-Executive Director
Tenure:
7 years
Skills and experience:
Sir Crispin has broad-ranging experience as a business leader within
international content and technology markets from his former roles as
chief executive of RELX Group (formerly Reed Elsevier) and the digital
agency, Aegis Group plc, and group managing director of Guinness PLC
(now Diageo plc). He was knighted in 2004 for services to
{
publishing
and
{
information. He brings a strong commercial perspective to
Board
{
discussions.
Michel Demaré
A
N
R
Non-Executive Director
Tenure:
4 years
Skills and experience:
Michel brings extensive international finance, strategy and M&A
experience to the Board, gained during his 18-year career at Dow
Chemical as CFO – Global Polyolefins & Elastomers Division, as CFO
of
{
Baxter International (Europe), and as CFO and head of global markets
of
{
ABB Group. He was the non-executive chairman of Syngenta until the
company was sold to ChemChina in 2017 and was the vice chairman of
UBS Group AG for 10 years.
External appointments:
–
AstraZeneca PLC, non-executive director and chair of the remuneration
committee
{
and member of the nomination and governance
committee and
{
the
{
audit committee
R
N
E
Committee key
Audit and Risk Committee
ESG Committee
Nominations and
Governance Committee
Remuneration Committee
Solid background signifies
Committee Chair
A
E
N
R
Strategic report
Financials
Other information
74
Vodafone Group Plc
Annual Report 2022
Governance
Dame Clara Furse DBE
R
E
Non-Executive Director
Tenure:
7 years
Skills and experience:
Dame Clara brings to the Board a deep understanding of international
capital markets, regulation, service industries and business transformation
developed from her previous roles as chief executive officer of the
London Stock Exchange Group plc and Credit Lyonnais Rouse Ltd.
Her
{
financial proficiency is highly valued. In 2008 she was appointed
Dame Commander of the Order of the British Empire.
External appointments:
–
Assicurazioni Generali S.p.A, non-executive director
Note:
Dame Clara Furse is currently non-executive director and chair of the nominations and remuneration
committees at Amadeus IT Group SA, but will not stand for re-election as a director at the AGM on
23
{
June 2022.
Deborah Kerr
Non-Executive Director
Tenure:
<1 year
Skills and experience:
Deborah brings to the Board a wealth of technology expertise having held
senior executive roles and non-executive appointments across a range
of
{
sectors. She was previously Managing Director of Value Creation at
Warburg Pincus, Chief Product and Technology Officer at Sabre, and Chief
Technology Officer for Hewlett-Packard’s Enterprise Services operations.
Deborah has a deep understanding of complex digital transformations.
External appointments:
–
NetApp INC, non-executive director and member of the
audit
{
committee
–
Chico’s FAS, Inc., non-executive director and member of the human
resources, compensation and benefits committee, the corporate
governance and nominating committee and the environmental,
social
{
and governance committee
Amparo Moraleda
Non-Executive Director
Tenure:
4 years
Skills and experience:
Amparo brings strong international technology experience to the Board
from her previous role as chief executive officer of the international
division of Iberdola and a career spanning 20 years at IBM, where she
held
{
a number of positions across a range of global locations.
External appointments:
–
Airbus Group, senior independent director, chair of nominations and
governance
{
committee and remuneration committee and member of
ethics & compliance committee
–
CaixaBank, non-executive director and chair of remuneration committee
–
A.P. Moller-Maersk, non-executive director and member of the
audit
{
committee, remuneration committee and transformation and
innovation committee
A
A
E
Governance (continued)
David Nish
A
Non-Executive Director
Tenure:
6 years
Skills and experience:
David has wide-ranging operational and strategic experience as a senior
leader and has
{
a strong understanding of financial and capital markets
through his previous directorships which include chief executive officer
and chief financial officer of Standard
{
Life plc and chief financial officer
of
{
Scottish Power plc.
External appointments:
–
HSBC Holdings plc, senior independent director, chair of the audit
committee
{
and
{
member of the risk committee and
{
the nomination
and corporate governance committee
Prospective Non-Executive Directors
subject to shareholder approval
Stephen Carter CBE
Skills and experience:
Stephen brings a track record of value creation and has extensive
commercial and regulatory experience in the telecoms and media
sectors. Since becoming CEO of Informa in 2013, the company
has
{
become a global leader in B2B Events and Digital Services and
Academic markets and Digital Services. Prior to Informa, Stephen held
various senior executive positions at Alcatel-Lucent, where he played
a
{
key role in restructuring the business, taking out significant cost,
and
{
investing in next generation mobile network equipment product
development. Stephen’s successful commercial track record is combined
with deep experience of public policy and regulation having served
as
{
the first CEO of Ofcom, where he brought together five different
regulatory authorities. After Ofcom, Stephen served as Chief of
Strategy for the UK’s Prime Minister, and then served as Minister,
Communications, Technology & Broadcasting. Stephen was also a
non-executive director for the Department for Business, Energy and
Industrial Strategy.
External appointments:
–
Informa PLC, group chief executive
Note:
Stephen is currently non-executive director and chair of the corporate responsibility committee
and member of the audit and nomination committees at United Utilities but his term on the board
will complete in July 2022.
Delphine Ernotte Cunci
Skills and experience:
Delphine has considerable experience in the telecoms sector and,
more recently, in media and technology. Since 2015, Delphine has
been President of France Télévisions, the French national public
television broadcaster. Prior to that, Delphine spent 26 years at
Orange, where she became Deputy CEO in 2010 and led the
successful turnaround of Orange France.
Simon Segars
Skills and experience:
Simon brings significant experience and insights on technology trends
and how these are reshaping industry landscapes. Simon has recently
stepped down as CEO of ARM, the global leader in the development
of
{
semiconductor technology. He successfully led the business since
2013 and generated significant value for investors during his tenure.
Prior to that, he was an engineer at Standard Telephones and Cables.
External appointments:
–
Dolby Laboratories, Inc., non-executive director
Committee key
Audit and Risk Committee
ESG Committee
Nominations and
Governance Committee
Remuneration
Committee
Solid background signifies
Committee Chair
A
E
N
R
Strategic report
Governance
Financials
Other information
75
Vodafone Group Plc
Annual Report 2022
Our governance structure
Audit and Risk Committee
Reviews the adequacy of the
Group’s system of internal
control, including the risk
management framework and
related compliance activities.
Monitors the integrity of financial
statements, reviews significant
financial reporting judgements,
advises the Board on fair,
balanced and understandable
reporting and the long-term
viability statement.
Nominations and
Governance Committee
Evaluates Board composition
and ensures Board diversity
and
{
a
{
balance of skills.
Reviews Board and Executive
Committee succession plans
to
{
maintain
{
continuity of
skilled
{
resource.
Oversees matters relating to
corporate governance.
Remuneration Committee
Sets, reviews and recommends
the
{
policy on remuneration of
the
{
Chairman, executives and
senior management team.
Monitors the implementation
of
{
the
{
Remuneration Policy.
Oversees general pay practices
across the Group.
The Board
Responsible for the overall conduct of the Group’s business including our long-term success; setting our purpose; monitoring cu
lture,
values, standards and strategic objectives; reviewing our performance; and maintaining positive dialogue with our stakeholders.
ESG Committee
Oversees the ESG programme,
purpose (Inclusion for All,
Planet
{
and
{
Digital Society)
and
{
the
{
social
{
contract.
Monitors progress against
key
{
performance indicators
and
{
external
{
ESG index results.
Oversees progress on ESG
commitments and targets.
Chief Executive
Purpose and Reputation
Steering Committee
Assists the Executive Committee with the effective
coordination of purpose activities and advises on
reputational risks and policy matters.
Global Products Board
Supports the Executive Committee by providing
visibility of global product strategy and life-cycle
and identifies capital allocation opportunities
Executive Committee
Focuses on strategy implementation, financial and competitive
performance, commercial and technological developments,
succession planning and organisational development.
Chief Financial Officer
The Board
The Board is comprised of the Chairman, Senior Independent Director,
Non-Executive Directors, the Chief Executive, and the Chief Financial
Officer. Our Non-Executive Directors bring independent judgement, and
wide and varied commercial and financial experience to the Board and
Committees. A summary of each role can be found on the page 76.
Board meetings are structured to allow open discussions. At each meeting
the Directors are made aware of the key discussions and decisions of the
principal Committees by the respective Committee Chairs. Minutes of Board
and Committee meetings are circulated to all Directors after each
{
meeting.
Read more about the Board’s activities during the year
on pages 77-78
The Board is collectively responsible for ensuring leadership through
effective oversight and review. It
{
sets
{
the strategic direction with the goal
of delivering sustainable stakeholder value over the longer term and
{
has
oversight of cultural and ethics programmes.
The Board also oversees the implementation of risk assessment systems
and processes to identify, manage and mitigate Vodafone’s principal risks.
It is also responsible for matters relating to
{
finance, audit and internal
control, reputation, listed company management, corporate governance,
remuneration and effective succession planning,
{
much of which is
overseen through its principal Committees.
The Executive Committee
The Executive Committee is comprised of Nick Read, Chief Executive,
Margherita Della Valle, Chief Financial Officer, a number of senior
executives responsible for
{
global commercial operations, human
resources, technology, external affairs and legal, as well as the
Chief
{
Executive Officers of our largest operating companies in
Germany,
{
the UK, Italy, Spain, Europe
{
Cluster and Vodacom Group.
Led by the Chief Executive, the Executive Committee and other management
committees are responsible for making day-to-day management and
operational decisions, including implementing strategic objectives and
empowering competitive business performance in line with established
risk management frameworks, compliance policies, internal control
systems and reporting requirements.
The Committee members have a broad range of experience, skills, and
expertise. Some members also hold external non-executive directorships,
giving them valuable board experience.
Click to read more about the Executive Committee:
vodafone.com/exco
Full details of the Committees’ responsibilities are provided within the respective Committee reports
starting on pages 80, 83, 89 and 91
Disclosure Committee
Oversees the accuracy and timeliness of Group disclosures
and
{
approves controls and procedures in relation to the
public
{
disclosure of financial information.
Risk and Compliance Committee
Assists the Executive Committee in fulfilling
its accountabilities with regard to
risk management and policy compliance.
Strategic report
Financials
Other information
76
Vodafone Group Plc
Annual Report 2022
Governance
Division of responsibilities
Governance (continued)
Chairman
Jean-François van Boxmeer
–
Leads the Board, sets each meeting agenda and ensures the Board
receives accurate, timely and clear information in order to monitor,
challenge, guide and take sound decisions;
–
Promotes a culture of open debate between Executive and Non-
Executive Directors and holds meetings with the Non-Executive
Directors, without the Executive Directors present;
–
Regularly meets with the Chief Executive and other senior
management to stay informed;
–
Ensures effective communication with shareholders and
other
{
stakeholders;
–
Promotes high standards of corporate governance and
ensures
{
Directors understand the views of the Company’s
shareholders
{
and
{
other key stakeholders, and the section
{
172
Companies Act 2006 duties;
–
Promotes and safeguards the interests and reputation of the
Company;
{
and
–
Represents the Company to customers, suppliers, governments,
shareholders, financial institutions, the media, the community and
the
{
public.
Senior Independent Director and Workforce
Engagement Lead
Valerie Gooding, CBE
–
Provides a sounding board for the Chairman and acts as a trusted
intermediary for the Directors as required;
–
Meets with the Non-Executive Directors (without the Chairman present)
when necessary and at least once a year to appraise the Chairman’s
performance and communicates the results to the Chairman;
–
Together with the Nominations and Governance Committee, leads
an
{
orderly succession process for the Chairman; and
–
Engages with the workforce in key regions where we operate,
answers
{
direct questions from workforce-elected representatives,
and
{
provides the Board with feedback on the content and outcome
of
{
those discussions.
Non-Executive Directors
–
Monitor and challenge the performance of management;
–
Assist in development, approval and review of strategy;
–
Review Group financial information and provide advice
to
{
management;
–
Engage with stakeholders and provide insight as to their views,
including in relation to workforce and the culture of Vodafone; and
–
As part of the Nominations and Governance Committee,
review
{
the
{
succession plans for the Board and key members
of
{
senior
{
management.
Company Secretary
Rosemary Martin
–
Ensures the necessary information flows between the Board,
Committees and between senior management and Non-Executive
Directors in a timely manner;
–
Supports the Chairman in ensuring the Board functions efficiently and
effectively, and assists the Chairman with organising Director induction
and training programmes;
–
Provides advice and keeps the Board updated on all corporate
governance developments; and
–
Is a member of the Executive Committee.
Chief Executive
Nick Read
–
Provides leadership of the Company, including representing the
Company to customers, suppliers, governments, shareholders, financial
institutions, employees, the media, the community and the public and
enhances the Group’s reputation;
–
Leads the Executive Directors and senior management team in running
the Group’s business, including chairing the Executive Committee;
–
Develops and implements Group objectives and strategy having regard
to shareholders and other stakeholders;
–
Recommends remuneration, terms of employment and succession
planning for the senior executive team;
–
Manages the Group’s risk profile and ensures appropriate internal
controls are in place;
–
Ensures compliance with legal, regulatory, corporate governance,
social, ethical and environmental requirements and best practice; and
–
Ensures there are effective processes for engaging with, communicating
with, and listening to, employees and others working for the Company.
Chief Financial Officer
Margherita Della Valle
–
Supports the Chief Executive in developing and implementing the
Group strategy;
–
Leads the global finance function and develops key finance talent;
–
Ensures effective financial reporting, processes and controls are
in
{
place;
–
Recommends the annual budget and long-term strategic and
financial
{
plan;
–
Oversees Vodafone’s relationships with the investment community;
–
Oversees shared services organisation (_VOIS); and
–
Leads on supply chain management, including the Vodafone
Procurement Company.
Click to read more about the Board’s role and
responsibilities,
b
matters reserved and the terms
of
b
reference
b
for each Board Committee:
vodafone.com/board
Read more about our Board Committees, together
with
b
details
b
of their activities on pages 80-112
Strategic report
Governance
Financials
Other information
77
Vodafone Group Plc
Annual Report 2022
Board activities and principal decisions
Board activities and discussion during the year were
structured to develop the Group’s strategy and to
enable the Board to support executive management
on the delivery of the strategy within a transparent
governance framework. The key topics discussed are
set out below.
Read more about Vodafone’s key stakeholders and how the
Board has engaged with them during the year on pages 14-15
Strategy and business developments
Strategy continued to be a key focus throughout the year. In addition to
the
{
usual Board meeting cadence, the Board attended a strategy away day.
A key focus for the away day was to consider the competitive landscape
and agree the strategic priorities for the next 12 months.
Strategic plan
Following completion of the first phase of the strategic plan, the Board
considered how the next phase would be executed and potential new
areas for high growth and shareholder return.
Enabling a digital society
The Board continued to focus on supporting digital connectivity,
infrastructure and technologies in Europe and Africa and regular
updates
{
were received on the progress made.
Digital and innovation
Digital technology remained a key focus this year following the launch of
the new technology operating model on 1 April 2021. The Board received
updates on the strategy for, and pace of, change within the business as we
digitalise our processes and promote a digital culture.
During the year the Board received presentations on the Company’s IT
transformation programmes that are designed to make the delivery of
technology for use in the Company faster and more efficient.
Innovation in future growth initiatives
Throughout the year the Board discussed several future growth initiatives
including the IoT connectivity strategy, the new VodaPay super-app
launch by Vodacom and future digital marketing initiatives.
Connected by Vodafone South Africa platform
At its September 2021 meeting, the Board considered the Connected by
Vodafone platform which seeks to ensure seamless connectivity and to
provide customers with ‘always connected’ experiences. A vision for the
platform was presented alongside proposed technology developments.
Business Plan and financial performance
Business Plan
At each Board meeting Nick Read provided an update on the execution
of
{
the Company’s business plan. A half-year progress report on execution
of the plan was considered by the Board at its November 2021 meeting.
The Board agreed that the Business Plan remained in alignment with the
Company’s purpose, vision and values.
Portfolio
At each Board meeting Nick Read informed the Board about progress
on
{
the strategy to optimise the Group’s portfolio of assets and provided
updates on merger and acquisitions activity.
Financial performance
The Board received regular updates on the financial performance of the
Group, market trends, strategic KPIs and taxation.
US bonds
As part of the Board’s oversight of the long-term funding requirements
of
{
the Group, annual updates are provided on activity related to our two
bond programmes: the US shelf programme listed on NASDAQ and the
Euro Medium Term Note programme listed in both London and Dublin,
to
{
ensure cost efficient and dependable financial resources are available
to the business.
Mandatory convertible bonds
In January 2022, the Board approved the commencement of a new
irrevocable and non-discretionary buyback programme following
maturity of the second tranche on 12 March 2022.
Investor relations
The Board received quarterly updates on market share information
and
{
updates on the results of three investor perception studies.
Annual
{
roadshow feedback was also provided during the year.
Read more about how the Board engaged with investors
during the year on page 15
Dividend
In its deliberations on the dividend, the Board considered the key
stakeholders and the decision to approve the dividend was supported
by
{
a robust assessment of the position, performance and viability of the
business carried out by management. The Board was mindful that the
Directors had continued to adopt the going concern basis in preparing the
annual report and accounts and was also cognisant of available reserves
to support the dividend.
On 16 November 2021, we announced a dividend of 4.50 eurocents per
share and have recommended a dividend of 4.50 eurocents per share to
be paid on 5 August 2022. This was consistent with dividends declared
during FY21 and the expectations of our shareholders.
Strategic report
Financials
Other information
78
Vodafone Group Plc
Annual Report 2022
Governance
Our people
Spirit, inclusion and diversity
The Board was kept updated on the success of the ‘Spirit of Vodafone’
programme. It was important for the Board to capture the sentiment of
our employees and measure the success of the programme.
Read more
on page 21
The Board received updates on the work being done to embed inclusion
to support the expansion of key diversity areas and endorsed the
programmes in place.
Read more about inclusion
on page 36
The Board reviews the Board Diversity Policy on an annual basis and
following input from the Nominations and Governance Committee,
the
{
Board approved the addition of ‘race and ethnicity’ to the Policy
in
{
November 2021.
Read more
on page 40
The Board considered the results of the
employee surveys. Read more on page 21
Talent and succession
The Board received an update on talent and succession within the Group
at its November 2021 meeting.
Modern slavery
The Board monitors our compliance with the requirements of the
UK
{
Modern Slavery Act 2015 and approved our Modern Slavery
Statement in May 2022.
Customers
The Board regularly received updates on the goal to drive systematic
improvement to the customer experience. Understanding our customer
response to our revised commercial offerings, which vary across markets,
is crucial. The Board regularly considered the Net Promoter Scores
focused on the drivers of satisfaction for consumers and business
customers, performance against KPIs and the overall success of
strategic
{
initiatives.
Information in relation to the evolving needs of consumers and business
customers is regularly provided to the Board by the Executive Committee
members and senior managers. The Board also considered how COVID-19
had accelerated the shift to digital interactions with customers.
Risk
The Board reviewed the principal risks and their impact on strategy and
commercial initiatives. An update on the operation of our internal risk and
compliance processes was also provided.
Read more about our system of internal controls and
risk
b
management on page 86
The war in Ukraine
The Board received updates from Nick Read and the Chief External and
Corporate Affairs Officer on the war in Ukraine and the support provided
by the Company and by Vodafone Foundation to those people and
organisations impacted.
Read more about the support provided
on page 36
Other
The Board has also spent time this year considering the following matters:
–
Health and safety;
–
Regulatory landscape; and
–
Climate and sustainability.
Looking forward
The Board’s focus for next year is expected to include:
–
Continuing focus on execution of our strategy and delivery of growth;
–
Overseeing the transformation of the Group into a new generation
connectivity and digital services provider;
–
Monitoring risks and ensuring they are managed effectively; and
–
Keeping under review the Company’s execution of its purpose strategy
and monitoring the Group’s culture.
Governance (continued)
Strategic report
Governance
Financials
Other information
79
Vodafone Group Plc
Annual Report 2022
The Board recognises that it needs to continually
monitor and improve its performance. Our annual
performance evaluation provides the opportunity for
the Board and its Committees to consider and reflect
on the effectiveness of its activities, the quality of
its
b
decision-making, and the collective contribution
made by each Board member.
Process undertaken for our Board evaluation
The 2022 Board evaluation was externally facilitated by Raymond Dinkin
of Consilium Limited (‘Consilium’), an independent board review firm. Both
Raymond Dinkin and Consilium are considered fully independent as they
do not have a relationship with the Board or any Director.
Following previous recommendations made by Consilium in 2021, the
Board requested that an assessment be made this year as to whether
previous recommendations had been implemented effectively and to
consider further recommendations to support the Board’s continued
development and effectiveness. The evaluation focused on strategic
stewardship and Board composition to gain further insight on participation
and how the Board was working as a whole.
In order to gather and distil feedback, members of senior management
and all Directors completed a tailored questionnaire and were interviewed
by Raymond Dinkin in early 2022. To support the evaluation of the
effectiveness of the Board as a whole, its Committees and individual
Directors’ contributions to discussions and decision-making, Raymond
Dinkin observed several Board and Committee meetings and reviewed
the meeting documentation.
Consilium collated the input received from individual Director
meetings
{
and the questionnaire to create a report which provided
an
{
independent assessment of the effectiveness of the Board. The
findings and recommendations were considered by the Board and
Board
{
Committees at the March and May 2022 meetings.
Summary of findings
The conclusions of this year’s review have been positive and confirmed
that the Board
{
remains effective.
Areas identified to enhance the Board’s effectiveness for FY23 include:
–
Refresh the composition of the Board to bring on more Directors
with
{
technology and/or telecommunications sector experience;
–
Devote more time to strategy sessions to enhance free-flowing
discussions and allow for additional topics to be discussed
where
{
required;
–
Topics requiring additional deep dives could be bolstered by using
smaller groups of the Board with specific expertise in the matter; and
–
More effective use of management tools to enable the Board to
engage with and join-up numerous initiatives.
Details of the next Board evaluation and progress made on the above
actions will be reported in the FY23 Governance Report.
Progress against actions identified following
the
{
2021
{
external evaluation
Action
Progress made
More and different forms
of
{
engagement between
Directors,
{
with and without
the
{
Executive Directors.
The Board was able to meet
in
{
person during the year in
Germany and the UK. The
Chairman held some sessions
with
{
the Non-Executive Directors
alone. A number of meetings
were
{
held that were not formal
Board meetings.
Refreshing the Board’s composition
and reviewing the mix
{
of skills and
experience on the Board in light of
the next phase of the strategy.
Since the end of FY22, the
Company has announced
the
{
appointment of three
new Non-Executive Directors.
Continue to ensure Board agendas
concentrate on the specifics of
organic improvement and growth
and their underlying drivers.
The Board agendas cover both
inorganic opportunities for growth
and organic improvement and
growth initiatives.
Understanding closely
the
{
organisation’s capacity,
capabilities
{
and cultural change
and monitoring progress on
new
{
proposition developments,
ESG
{
and culture change.
During the year the Board
considered these matters. An
ESG
{
Committee was established
in
{
November 2021.
Board effectiveness and improving
our performance
Strategic report
Financials
Other information
80
Vodafone Group Plc
Annual Report 2022
Governance
The Nominations and Governance Committee
(
ȁ
the
b
Committee’) continues to ensure that
the
b
Board
b
has an appropriate balance
b
of skills,
knowledge, experience and diversity so that
it
b
is
b
effective in discharging its responsibilities
and
b
in
b
having oversight of all matters relating
to
b
corporate
b
governance.
Chairman
Jean-François van Boxmeer
Members
Sir Crispin Davis
Valerie Gooding
Michel Demaré (appointed as a member on 22 November 2021)
Renee James (stepped down from the Board on 27 July 2021)
Key responsibilities
–
Assessing the composition, structure and size of the Board and its
Committees and making recommendations on appointments to
the
{
Board;
–
Succession planning for the Board and Executive Committee;
–
Overseeing the performance evaluation of the Board, its Committees
and individual Directors; and
–
Monitoring developments in all matters relating to corporate
governance, bringing any issues to the attention of the Board.
The Committee is comprised solely of independent Non-Executive
Directors. The Committee had four scheduled meetings during the
year
{
which were fully attended by all members.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Letter from Committee Chairman
On behalf of the Board, I am pleased to present the Nominations and
Governance Committee Report for the year ended 31 March 2022. This
year, the Committee has spent time focusing on changes to the Board’s
composition. The Committee’s current priority is the search for new
Non-Executive Directors following the departures of Renee James and
Sanjiv Ahuja. I want to extend our gratitude for their dedicated service
to
{
Vodafone.
In September 2021 we announced the appointment of Deborah Kerr
as
{
a
{
Non-Executive Director who joined the Board on 1 March 2022.
In
{
May
{
2022, we also announced the appointments of Stephen Carter,
Delphine Ernotte Cunci and Simon Segars who will be appointed as
Non-Executive Directors following the Company’s AGM, subject to
shareholder approval.
We continue to focus on our commitment to diversity which extends
beyond the Board and the Executive Committee and towards developing
the talent pipeline through the review of initiatives to enhance diversity,
including gender and ethnic diversity and disability inclusion.
I look forward to reporting on further progress as we continue our work
across the following financial year.
Read more about our programmes to manage talent
on pages 21 and 22
Highlights from the year
–
Recommendation of the establishment of an ESG Board
Committee;
{
and
–
Appointment of Deborah Kerr to the Board with her induction
programme currently underway.
Key focus for the next year
The key areas of focus for the next year are:
–
The implementation and completion of inductions for Stephen Carter,
Delphine Ernotte Cunci, Simon Segars and Deborah Kerr respectively;
–
Continuation of the search for Non-Executive Directors who enhance
the skill, knowledge, experience and diversity of the Board;
–
Board and Executive Committee succession planning in order to
maintain the necessary balance of skills, knowledge, experience and
diversity to
{
remain effective;
–
Continuing to review Board independence and ensuring Directors
have
{
sufficient time to fulfil their Board responsibilities; and
–
Continuing to monitor compliance with the Code and future
regulatory
{
updates.
Changes to the Board and Committees
On 27 July 2021, Sanjiv Ahuja and Renee James stepped down from
the
{
Board. Upon stepping down from the Board, Renee James also left
the
{
Nominations and Governance Committee and the Remuneration
Committee and Sanjiv Ahuja left the Audit and Risk Committee.
Over the next 18 months there will be a number of scheduled retirements
from the Board. In line with these departures, the Committee has been
focused on finding suitable successors to further enhance the Board’s
experience within the telecommunications and technology sectors, and
to ensure that the Board and its Committees can continue to effectively
discharge their responsibilities.
I am pleased to welcome Deborah Kerr to the Board who was appointed
as a Non-Executive Director on 1 March 2022. Deborah brings a wealth
of
{
technology expertise across a range of sectors, as well as extensive
non-executive board experience. I am also delighted to welcome Stephen
Carter, Delphine Ernotte Cunci and Simon Segars to Vodafone’s Board
as
{
Non-Executive Directors, subject to shareholder approval at the 2022
AGM. They are well-respected leaders who bring extensive experience
and track records of value creation across the telecoms, technology and
media sectors.
At the 2021 AGM, Olaf Swantee was appointed by the shareholders as
a
{
new Non-Executive Director. However, in light of a potential conflict of
interest, Olaf decided to step down with effect from 25 September 2021.
An ESG Committee was established during this financial year with the
role
{
to provide oversight of Vodafone’s ESG programme, sustainability
and responsible business practices as well as Vodafone’s contribution to
the societies we operate in under the social contract.
Read more about the ESG Committee
on page 89
The Committee is regularly informed of succession planning and changes
to the membership of the Executive Committee.
In April, we announced that Hannes Ametsreiter will step down as Chief
Executive Officer of Vodafone Germany and as a member of the Group
Executive Committee on 30 June 2022. Philippe Rogge will become
Chief
{
Executive Officer of Vodafone Germany and a member of the
Group
{
Executive Committee on 1 July 2022.
There were no changes to the membership of the Executive Committee
during the year.
Succession planning
The Committee monitors the length of tenure and the skills and experience
of the Non-Executive Directors to assist in succession planning.
Read more about the details of the length of tenure of each
Director and a summary of the skills and experience of the
Non-Executives on pages 73 and 74
Nominations and Governance Committee
Governance (continued)
Strategic report
Governance
Financials
Other information
81
Vodafone Group Plc
Annual Report 2022
In light of recent and anticipated changes to the Board membership,
MWM Consulting, an independent search firm, was appointed to lead
a
{
search for new Non-Executive Directors who have relevant experience
in the telecommunications and technology sectors, who will make
valuable contributions to the Board’s work and who will contribute
to
{
the
{
Board’s diversity.
The Committee is confident that the Board currently has the
necessary
{
mix of skills and experience to contribute to the
Company’s
{
strategic objectives.
Appointment process for Non-Executive Directors
To begin the appointment process, Vodafone engages with a search
consultancy and provides the agency with a search specification.
The
{
results of the search consist of individuals from a diverse range
of
{
backgrounds and characteristics. Capturing the clear benefits of
diversity
{
of background and opinion, and identifying candidates with the
requisite experience and capabilities, is at the forefront of this search. The
shortlisted candidates are interviewed by the Committee members and
the Chief Executive. A recommendation is made to the Board on the
chosen candidate. Once a candidate is selected, appointment terms
are
{
drafted and agreed with the selected candidate.
Assessment of the independence of the Non-Executive Directors
All Non-Executive Directors have submitted themselves for election
or
{
re-election, as applicable, at the 2022 AGM.
In accordance with the Code, the independence of all the Non-Executive
Directors was considered by the Committee.
All Non-Executive Directors are considered independent and they continue
to make independent contributions and effectively challenge management.
The Executive Directors’ service contracts and Non-Executive Directors’
appointment letters are available for inspection at our registered office
and will be available on display at the 2022 AGM.
Management of conflicts of interest
The Companies Act 2006 provides that directors have a duty to avoid a
situation in which they have or may have a direct or indirect interest that
conflicts or might conflict with the interests of the Company. This duty is
in addition to the existing duty owed to the Company to disclose to the
Board any interest in a transaction or arrangement under consideration
by
{
the Company.
Our Directors must report any changes to their commitments to the
Board, immediately notify the Company of actual or potential conflicts
or
{
a change in circumstances relating to an existing authorisation and
complete an annual conflicts questionnaire. Any conflicts or potential
conflicts identified are considered and, as appropriate, authorised by the
Board in accordance with the Company’s Articles of Association. A register
of authorised conflicts is also reviewed periodically.
The Committee and the Board are satisfied that the external commitments
of the Non-Executive Directors and of me, your Chairman, do not conflict
with our duties and commitments as Directors of the Company, and that
each Non-Executive Director is able to dedicate sufficient time to the
Company’s affairs. The Committee is comfortable that it has adequate
measures in place to manage and mitigate any actual or potential
conflicts of interests that may arise in the future.
Board evaluation
In accordance with the Code, Vodafone conducts an annual evaluation of
Board and Board Committee performance, which every Director engages
in and which is facilitated by an independent third party at least once
every three years. This year, an external evaluation of the performance
of
{
the Board and Committees was facilitated by Raymond Dinkin of
Consilium Limited which has no other connection with Vodafone. The
Committee oversaw the evaluation process and was involved in the
selection of the external provider for review.
Read more about the outcome of
b
this review
on page 79
Time commitment
In accordance with the Code, the Committee actively reviews the time
commitments of the Board. All Directors are engaged in providing their
external commitments to establish that they have sufficient time to meet
their Board responsibilities. The Committee is satisfied that the Board does
meet this requirement and all Directors provide constructive challenge,
strategic guidance and hold management to account.
Diversity
In line with Vodafone’s Board Diversity Policy, the Committee is firmly
committed to supporting diversity and inclusion in the boardroom in
compliance with the Code and acknowledges the importance of diversity
and inclusion to the effective functioning of the Board.
As set out in our Board Diversity Policy, Vodafone’s long-term ambition is
to increase diversity on our Board in all its forms. The Committee annually
reviews and agrees the Board Diversity Policy and monitors the progress
made at Board and senior management levels during the financial year.
The Committee continues to monitor requirements as set by the FTSE
Women Leaders Review and NASDAQ listing rules in terms of gender
diversity and the Parker Review in terms of ethnic diversity. Vodafone
acknowledges that these targets are not just an end goal, but rather
steps
{
towards a drive for further progress.
Commitment to diversity at
{
Vodafone extends beyond the Board to
the
{
global workforce. For the fourth year in a row, Vodafone has been
included in the Bloomberg Gender Equality Index, a list of 418 companies
committed to gender equality, highlighting our commitment to fostering
an inclusive workplace. Our Diversity and Inclusion activity includes
our
{
market-leading parental policies, our award-winning ReConnect
programme, our global Domestic Violence and Abuse Policy, and our
dedicated and passionate employee networks.
The Securities and Exchange Commission has approved the updates to
the NASDAQ listing rules to incorporate new board diversity requirements,
which Vodafone will be subject to as a foreign issuer. As a foreign issuer,
Vodafone satisfies these requirements.
In line with the Hampton-Alexander Review recommendation that by
2020
{
there would be at
{
least 33% female representation at the Board,
Executive Committee positions and direct reports of the Executive
Committee (the
{
‘Senior Leadership Team’), we are pleased to report
that
{
as at 31 March 2022, 50% of our Board were female. Both our Senior
Independent Director and Chief Financial Officer positions also continue
to be held by women.
Our Executive Committee has four positions held by women (28.6%).
In
{
the Senior Leadership Team,
{
56 roles are held by women (31.8%).
In line with these targets and recommendations, we have developed
and
{
introduced a series of pioneering global programmes. Vodafone
has
{
made a global commitment to support its employees during the
menopause, an initiative that forms part of Vodafone’s broader strategy
of
{
supporting all employees through every life stage to create a culture
of
{
inclusion. The initiative has rolled out a training and awareness
programme to all employees globally, including a toolkit focused
on
{
raising understanding of the menopause and providing guidance
on
{
how
{
to support employees, colleagues and family members.
Additionally, Vodafone has a global Domestic Violence and Abuse Policy
which sets out a comprehensive range of workplace supports, security
and other measures for employees at risk of, experiencing, and recovering
from, domestic violence and abuse. There is also the global parental leave
policy which offers 16 weeks fully paid leave to all employees.
Strategic report
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Other information
82
Vodafone Group Plc
Annual Report 2022
Governance
Governance (continued)
Board Diversity Matrix
1
As of 31 March 2022
Country of Principal Executive Offices
United Kingdom
Foreign Private Issuer
Yes
Disclosure Prohibited under Home Country Law
No
Total Number of Directors
10
Part I: Gender Identity
Female
Male
Non-Binary
Did Not
Disclose
Gender
Directors
5500
Part II: Demographic Background
Under-represented individual in
Home Country Jurisdiction
0
LGBTQ+
0
Did Not Disclose Demographic
Background
1
Note:
1.
Prepared in accordance with guidance issued by NASDAQ. More information can
{
be found here:
listingcenter.nasdaq.com/home.aspx
Read more about how we build a diverse and inclusive
organisation on pages 39 and 40
This year, the CEO of Vodafone Ireland and the CFO of Vodafone Germany
were also recognised at the EMEA 2022 WeQual Awards for driving greater
equality and innovation. Attracting, retaining and promoting diverse leaders
drives greater inclusion within the organisation, and we are confident th
at
the additional initiatives detailed on page 39 will
{
support us to reach the
FTSE Women Leaders Review target to have at least 40% of women
holding management and
{
leadership roles by
{
2025.
The Committee is mindful of the recommendation of the Parker
Review
{
to have at least one Director from a non-white ethnic minority
by
{
2021. Whilst it is disappointing not to continue to meet this target
from
{
28 July 2021, this is the first time in 18 years where we have not
been able to confirm that at least one ethnic minority Director sits on our
Board and we continue to take practical and purposeful steps towards
enhancing the Board’s diversity. Vodafone has introduced new ethnic
diversity targets to ensure that by 2030, 25% of the global senior
leadership will come from ethnically diverse backgrounds. Based on
self-declaration, currently 18% of Vodafone’s global Senior Leadership
Team are from ethnically diverse backgrounds. Vodafone UK also
confirmed that by 2025, 20% of its UK-based senior people will come
from Black, Asian, or other diverse ethnicities, with 4% of those to be
Black. Vodafone’s UK-based senior management and leadership are
currently 15% Black, Asian or other diverse ethnicities, of whom 1%
are
{
Black. These commitments build on Vodafone’s Race, Ethnicity
and
{
Cultural Heritage (‘REACH’) action plan, a wider programme
launched
{
in
{
2020 to achieve greater workplace inclusion through
allyship
{
and anti-racism.
Read more about our workplace inclusion programme
on page 39
We continue to challenge our external search consultants to ensure that
all forms of diversity, in particular ethnicity and gender, are considered
when drawing up candidate shortlists.
Governance
The Committee continues to review action taken to comply with the
Code and other legal and regulatory obligations during the year. The
Committee received regular governance updates and is satisfied that
Vodafone has complied with the Code in full during the year.
The Matters Reserved for the Board and the terms of reference of the
Nominations and Governance Committee, the Audit and Risk Committee,
the ESG Committee and the Remuneration Committee were reviewed in
March 2022.
Jean-François van Boxmeer
On behalf of the Nominations and Governance Committee
17 May 2022
Strategic report
Governance
Financials
Other information
83
Vodafone Group Plc
Annual Report 2022
The Committee plays a key role in the governance
of
b
the
b
Group’s financial reporting, risk management,
internal control and assurance processes and the
external audit. During the year, the Committee
performed a series of business unit reviews and
completed a schedule of risk deep dives, with a
continued focus on cyber security given the high
level of external threat.
Chairman and financial expert
David Nish
Members
Michel Demaré
Deborah Kerr
Amparo Moraleda
Key responsibilities
The responsibilities of
{
the Committee are to:
–
Monitor the integrity of the financial statements, including the review
of
{
significant financial reporting judgements;
–
Monitor the Group’s risk management system, review of the principal
risks and the management of those risks;
–
Provide advice to the Board on whether the Annual Report is fair,
balanced and understandable and on the appropriateness of the
long-term viability statement;
–
Review and monitor the external auditor’s independence and
objectivity and the effectiveness of the external audit;
–
Review the system of internal financial control and compliance with
section 404 of the US Sarbanes-Oxley Act;
–
Review and provide advice to the Board on the approval of the Group’s
US Annual Report on Form 20-F; and
–
Monitor the activities and review the effectiveness of the Internal
Audit
{
function.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Letter from the Committee Chair
I am pleased to present our report to you as Chair of the Audit and Risk
Committee. This report provides an overview of how the Committee
operates, an insight into the Committee’s activities during the year
and
{
its
{
role in ensuring the integrity of the Group’s published financial
information and the effectiveness of its risk management, controls and
related processes.
The membership of the Committee changed during the year. Sanjiv Ahuja
stepped down from the Board and therefore the Committee in July 2021.
I would like to thank Sanjiv for his contribution to the work of the Committee.
We welcomed Deborah Kerr to the Committee following her appointment
to the Board on 1 March 2022.
The Committee met five times during the year. The attendance by members
at Committee meetings can be seen on page 68. Each meeting a
ge
nd
a
included a range of topics across the Committee’s areas of responsibility.
–
Cyber threat is the Group’s top principal risk and an area where we
remain vigilant given that external threats remain at a very high level.
This manifested itself in February 2022 when Vodafone Portugal was
the target of a deliberate cyber attack which impacted our services in
that market. The preparedness and skill of our technology team ensured
that most services were recovered very quickly. During the year, the
Committee regularly met with the Chief Technology Officer and Cyber
Security Director to assess how the risks were being managed and how
we can further reinforce our cyber security (see pages 49 to 51);
–
We completed a series of reviews across multiple business units,
typically with a focus on the risk and control environment. During the
year the Committee met with the CEO and CFO of Vantage Towers,
the
{
Director of the Group’s shared service centre organisation and the
market CEOs in Germany, the UK, Italy, Spain, Egypt and Other Europe;
–
At the September and March meetings we considered the anticipated
financial reporting matters, in addition to the review of the half-year
results announcement at our November meeting and of the Annual
Report and accompanying materials at our May meeting, prior to
the
{
Group’s results release. Our work included reviews of goodwill
impairment testing, taxation judgements, legal contingencies and
the
{
Company’s work on going concern and the long-term viability
statement; and
–
We performed deep dive reviews on certain other principal risks,
including supply chain disruption with the Global Supply Chain Director
and adverse political and policy environments with the Chief External
and Corporate Affairs Officer.
We welcome the enhanced disclosures on pages 66 and 67 to comply
with the framework provided by the Task Force on Climate-related
Financial Disclosures (‘TCFD’). In addition, we assessed with management
the potential impact of climate change on the consolidated financial
statements (see note 1 ‘Basis of preparation’ in the consolidated financial
statements on page 133 for further information).
Our external auditor, Ernst & Young (‘EY’), continues to provide
robust
{
challenge to management and provides its independent view
to
{
the Committee on specific financial reporting judgements and the
control environment.
Every three years the Board appoints an external organisation to perform
an independent review of the Committee to evaluate its performance.
The last review concluded that the Board members considered the
Committee to be thorough and fully effective in meeting its objectives.
Furthermore, a finding of the Vodafone Board effectiveness review
conducted in 2022 by an external third party concluded that the
Committee was operating effectively.
David Nish
On behalf of the Audit and Risk Committee
Audit and Risk Committee
Objective
The Committee’s objective is the provision of effective governance
over
{
the appropriateness of financial reporting of the Group, including
the
{
adequacy of related disclosures, the performance of both the
Internal
{
Audit function and the external auditor and oversight of
the
{
Group’s systems of internal control, business risks and related
compliance activities.
Committee governance
Committee meetings normally take place the day before Board
meetings.
{
The Committee Chair reports to the Board, as a separate
agenda item, on
{
the activity of the Committee and matters of particular
relevance. The
{
Board has access to the Committee’s papers and receives
copies of
{
the Committee minutes.
The Committee regularly meets separately with the external auditor,
the
{
Chief Financial Officer, the Group Audit Director and the Group Head of
Risk and Compliance without others being present. The Chair also meets
regularly with the external lead audit partner during the year, outside of
the formal Committee process.
Scan or click to watch the Chair of the
Audit
b
and
b
Risk
b
Committee explain his role:
investors.vodafone.com/videos
Strategic report
Financials
Other information
84
Vodafone Group Plc
Annual Report 2022
Governance
The Chair is designated as the financial expert on the Committee
for
{
the
{
purposes of the US Sarbanes-Oxley Act and the 2018 UK
Corporate
{
Governance Code (‘Code’). The Committee continues to
have
{
competence relevant to the
{
sector in which the Group operates.
The
{
skills
{
and experience of Committee members are detailed on
pages
{
73 and 74.
Read more
on pages 73 and 74
War in Ukraine
Whilst the Group does not have significant operations in either Russia
or
{
Ukraine, a review was undertaken by management to assess any
consequences on the financial statements arising from the conflict
or
{
from the resulting sanctions imposed on Russia and Belarus. It was
concluded there are no material impacts on the consolidated financial
statements for the year ended 31 March 2022.
The impact on the Group’s principal risks was also assessed as set out in
the ‘Risk management’ section.
Long-term viability statement and
going concern assessment
The Committee provides advice to the Board on the form and basis of
conclusion underlying the long-term viability statement and the going
concern assessment.
Read more about the long-term viability statement
on page 65
Read more about the going concern assessment
on page 118
The Committee challenged management on its financial risk assessment
as part of its consideration of the long-term viability statement. This
included scrutiny of forecast liquidity, balance sheet stress tests,
the
{
availability of cash and cash equivalents through new or existing
financing
{
facilities and a review of counter-party risk to assess the
likelihood of third parties not being able to meet contractual obligations.
This comprehensive assessment of the Group’s prospects made by
management included consideration of:
–
The review period and alignment with the Group’s internal long-
term
{
forecasts;
–
The assessment of the capacity of the Group to remain viable after
consideration of future cash flows, expected debt service requirements,
undrawn facilities, and access to capital markets;
–
The modelling of the financial impact of severe but plausible risk
scenarios materialising, including the impact of energy price inflation,
exacerbated by the war in Ukraine;
–
Ensuring clear and enhanced disclosures in the Annual Report
as
{
to
{
why the assessment period selected was appropriate to
the
{
Group,
{
what qualifications and assumptions were made and
how
{
the
{
underlying analysis was performed, consistent with
FRC
{
pronouncements; and
–
Comprehensive disclosure in relation to the Group’s liquidity provided
in the consolidated financial statements. See note 22 ‘Capital and
financial risk management’.
Financial reporting
The year ended 31 March 2022 is the third financial year that has
been,
{
at
{
least partially, impacted by the COVID-19 pandemic. Restrictions
regarding social distancing and travel eased during the year and most of
our offices were open for part of the year. Many of the Group’s employees
involved with financial reporting now split the working week between
office working and remote working, and this approach is fully embedded
and works effectively. The controls we implemented last year to support
remote working remain in place.
The Committee’s primary responsibility in relation to the Group’s
financial
{
reporting is to review, with management and the external auditor,
the appropriateness of the half-year and annual consolidated financial
statements. The Committee focuses on:
–
The quality and acceptability of accounting policies and practices;
–
Providing advice to the Board on the form and basis underlying
the
{
long-term viability statement;
–
Material areas in which significant judgements have been applied or
where significant issues have been discussed with the external auditor;
–
An assessment of whether the Annual Report, taken as a whole, is fair,
balanced, and understandable and whether our US Annual Report
on
{
Form 20-F complies with relevant US regulations;
–
The clarity of the disclosures and compliance with financial
reporting
{
standards and relevant financial and governance
reporting
{
requirements; and
–
Any correspondence from regulators in relation to our
financial
{
reporting.
Accounting policies and practices
The Committee received reports from management in relation to:
–
The identification of critical accounting judgements and key sources
of
{
estimation uncertainty, including the impact of climate change on
the consolidated financial statements;
–
Significant accounting policies; and
–
Proposed disclosures of these in the 2022 Annual Report.
Following discussions with management and the external auditor, the
Committee approved the disclosures of the accounting policies and
practices set out in note 1 ‘Basis of preparation’ and within other notes
to
{
the consolidated financial statements.
Fair, balanced and understandable
The Committee assessed whether the Annual Report, taken as
a
{
whole,
{
is
{
fair, balanced and understandable and provides the
information
{
necessary for shareholders to assess the Company’s
position
{
and performance, business model and strategy. This
assessment
{
is supported by the Group’s Disclosure Committee which
is
{
chaired by the Group General Counsel and Company Secretary who
briefs the Committee on the Disclosure Committee’s work and findings.
The Committee reviewed the
{
processes and controls that underpin
the
{
Annual Report’s preparation, ensuring that all
{
contributors and
senior
{
management are fully
{
aware of the requirements and their
responsibilities. This included the
{
financial reporting responsibilities of
the
{
Directors under section 172 of the Companies Act 2006 to promote
the success of the Company for the benefit of its members as well as
considering the interests of other stakeholders which will have an impact
on the Company’s long-term success.
The Committee reviewed an early draft of the Annual Report to
enable
{
input and
{
comment. In conjunction with the ESG Committee,
this
{
included the review of ESG-related disclosures, including TCFD.
The
{
Committee also reviewed the results announcement, supported
by
{
the
{
work of the Group’s Disclosure Committee, which also reviews
and
{
assesses the appropriateness of investor
{
communications.
This work enabled the Committee to provide positive assurance to the
Board to assist it in making the statement required by the Code.
Significant financial reporting judgements
The areas considered and actions taken by the Committee in relation
to
{
the 2022 consolidated financial statements are outlined overleaf.
For
{
each area, the Committee was satisfied with the accounting and
disclosures in the consolidated financial statements.
Governance (continued)
Strategic report
Governance
Financials
Other information
85
Vodafone Group Plc
Annual Report 2022
Area of focus
Actions taken
India accounting matters
The disclosure and accounting judgements in relation to:
–
The impact on the Group’s conditional and capped obligations to
make certain payments to Vodafone Idea Limited (‘VIL’) under a
payment mechanism agreed at the time of the merger between
Vodafone India and Idea Cellular in 2017.
–
The valuation of the security package provided by the Group to
Indus
{
Towers (‘Indus’) in respect of commitments of VIL to Indus and
the obligation to the TRS lenders, considering the referenced assets.
–
The classification of the Group’s investment in Indus as held for sale.
See note 29 ‘Contingent liabilities and legal proceedings’ in the
consolidated financial statements.
The Committee reviewed the appropriateness of the Group’s
accounting
{
judgements in relation to
{
potential liabilities under the
payment mechanism agreed with VIL, considering VIL’s
{
ability to make
any further material payments. The review considered the implications of
the telecommunication relief package published by the Government of
India in September 2021 and the anticipated debt for equity conversion,
as well as VIL’s indebtedness, cash flows and need for additional funding.
The Committee also reviewed accounting matters relating to Indus
Towers, notably (i) the terms of the pledges contained in the security
package, (ii) the disposal of primary pledge shares during the year and
(iii)
{
the continued classification as held for sale in the consolidated
financial statements.
These
{
reviews occurred at the September 2021, November 2021,
March
{
2022, and May 2022 Committee meetings.
Impairments
Judgements in relation to impairment testing relate primarily to the
assumptions underlying the calculation of the value in use of the Group’s
businesses, being the achievability of the long-term business plans and
the macroeconomic and related valuation model assumptions.
See note 4 ‘Impairment losses’ in the consolidated financial statements.
The Committee met with the Group Head of Financial Planning &
Analysis in May 2022 to discuss the impairment exercise undertaken
and
{
to challenge the appropriateness of assumptions made, including:
–
The consistent application of management’s valuation methodology;
–
The achievability of the Group’s five year business plans;
–
The potential impacts of (i) rising energy cost, (ii) the war in
Ukraine
{
and (iii) climate change on the Group’s businesses and
valuation assumptions;
–
The long-term growth assumed for the Group’s businesses at the end
of the plan period; and
–
The discount rates assumed in the valuation of the Group’s businesses.
During the year, the Group recorded no material impairments of asset
carrying values.
Taxation
The Group is subject to a range of tax claims and related legal actions
in
{
several jurisdictions where it operates.
Furthermore, the Group has extensive accumulated tax losses, and a
key
{
management judgement is whether a deferred tax asset should
be
{
recognised in respect of those
{
losses.
See note 6 ‘Taxation’ and note 29 ‘Contingent liabilities and legal
proceedings’ in the consolidated financial statements.
The Committee met with the Group Tax Director in November 2021
and
{
May 2022 in
{
advance of the half-year and year-end reporting,
respectively. The Group Tax Director also provided a briefing on
international tax reform and its consequences for the Group.
The Committee challenged the judgements underpinning tax
provisioning, deferred tax assets and related disclosures.
Liability provisioning
The Group is subject to a range of claims and legal actions from
a
{
number of sources, including, but not limited to, competitors,
regulators,
{
customers, suppliers and, on occasion, fellow shareholders
in
{
Group subsidiaries.
See note 16 ‘Provisions’ and note 29 ‘Contingent liabilities and legal
proceedings’ in the consolidated financial statements.
The Committee met with the Director of Litigation in November 2021 and
May 2022 in
{
advance of the half-year and year-end reporting, respectively.
The Group Litigation Director updated the Committee on legal
contingencies and key investigations.
The Committee reviewed and challenged management’s assessment
of
{
the status of the most significant claims, together with relevant legal
advice received by the Group, to form a view on the level of provisioning
and appropriateness of disclosures in the financial statements.
Revenue recognition
Revenue is a risk area given the inherent complexity of IFRS 15
accounting requirements and the underlying billing and related
IT
{
systems.
See note 1 ‘Basis of preparation’ in the consolidated financial statements.
The accounting policy for, and related disclosure requirements of
IFRS
{
15 that have been presented in the Annual Report, were reviewed
in
{
March and May 2022.
The Committee considered the scope of EY’s planned revenue audit
procedures, and their related audit findings and observations at its
meetings in November 2021 and May 2022.
Strategic report
Financials
Other information
86
Vodafone Group Plc
Annual Report 2022
Governance
Regulators and our financial reporting
The FRC publishes thematic reviews and other guidance to help
companies improve the quality of corporate reporting through the
provision of guidance and reviews of the quality of reporting across
public
{
companies. The Group routinely reviews FRC publications,
the
{
most relevant publications for the 2022 Annual Report being:
–
Key matters for 2021/22 reports and accounts;
–
Annual review of corporate reporting 2020/21; and
–
Thematic review on existing disclosure requirements for
(i)
{
alternative
{
performance measures, (ii) viability and going concern
and (iii) provisions, contingent liabilities and contingent assets.
The Group already complied with the majority of the recommendations
and the 2022 Annual Report has been updated to adopt best practice
where appropriate.
In addition, the FRC published a thematic review on interim reporting. Its
recommendations were reviewed during the Group’s half-year reporting.
The Task Force on Climate-related Financial Disclosures (‘TCFD’) sets out
four core areas of recommended climate-related disclosures, which the
Group disclosed on a voluntary basis in the 2021 Annual Report. The Risk
management section in the 2022 Annual Report has been expanded to
include enhanced disclosures. This is an evolving topic which the Group
will monitor closely.
Internal control and risk management
The Committee has the primary responsibility for the oversight of the
Group’s system of internal control, including the risk management
framework, the compliance framework, and the work of the Internal
Audit
{
function.
Internal Audit
The Internal Audit function provides independent and objective assurance
over the design and operating effectiveness of the system of internal
control, through a risk-based approach. The function reports into the
Committee and, administratively, to the Group Chief Financial Officer. The
function is composed of teams across Group functions and local markets.
This enables access to specialist skills through centres of excellence and
ensures local knowledge and experience. Cooperation with professional
bodies and an information technology research firm has ensured access
to additional specialist skills and an advanced knowledge base.
Internal Audit activities are based on a robust methodology and the
internal quality assurance improvement programme ensures conformity
with the International Professional Practices framework, which includes
the IIA Standards and Code of Ethics, and the continuous development of
the audit methodology applied. The conformity was reviewed and verified
through an External Quality Assessment by an independent consultancy
firm. The function has invested in several initiatives to improve its
effectiveness, particularly in the adoption of new technologies. The
innovative use of data analytics has provided broader and deeper audit
testing and driven increased insights.
The Committee has a standing agenda item to cover Internal Audit related
topics. Prior to the start of each financial year, the Committee reviews
and
{
approves the annual audit plan, assesses the adequacy of the budget
and resources, and reviews the operational initiatives for the continuous
improvement of the function’s effectiveness. The audit plan’s rolling
review framework, and the data driven risk assessment used to identify
emerging risks is considered and amendments to the audit programme
reviewed during the financial year.
The Committee reviews progress against the approved audit plan and
the
{
results of our audit activities, with a stronger focus on unsatisfactory
audit results and ‘cross-entity audits’, which are audits that are performed
across multiple markets with the same scope. Audit results are analysed
by process and entity (local markets/Group functions) to highlight both
changes in the control environment and areas that require attention.
During the year, Internal Audit coverage focused on principal risks, which
included: Cyber threat and Strategic transformation. Relevant audit results
are reported before the Committee’s in-depth review with the risk owner,
which allows the Committee to have an integrated view on the way the
risk is managed.
Assurance was also provided across a range of areas, including digital
customer journeys, technology controls in financial systems, data
privacy,
{
access to commercial systems, compliance with anti-bribery
and
{
economic sanctions policies, Vodafone Business application/portal
security, secured engineering access to networks, sustainability, and
M-Pesa. The activities performed by the shared service organisation also
received attention due to their significant bearing on the effectiveness of
global processes.
Management is responsible for ensuring that issues raised by Internal
Audit are addressed within an agreed timetable, and the Committee
reviews their timely completion.
An independent review of the effectiveness of the Group’s Internal Audit
function was performed by Deloitte LLP and the findings presented to the
Committee at the January 2022 meeting. The review concluded that the
Internal Audit function operated in accordance with the Global Institute of
Internal Auditors’ International Professional Practices Framework, is at the
top of its peer group range and demonstrates areas of innovative practice.
It was also recommended that the Internal Audit function could reach the
top end ‘world class’ assessment with some additional innovation and a
more strategic role.
Assessment of the Group’s system of internal control,
including
{
the
{
risk management framework
The Group’s risk assessment process and the way in which significant
business risks are managed is an area of focus for the Committee.
The
{
Committee’s activity here was led primarily, but not solely, by the
Group’s
{
assessment of its principal and emerging risks and uncertainties,
as set out
{
on pages 60 to 64. Cyber threat remains a major focus for the
Committee given the ever-increasing risks in this
{
area and cyber attacks
in
{
the year.
The Group has an internal control environment designed to protect the
business from the material risks which have been identified. Management
is responsible for establishing and maintaining adequate internal controls
and the Committee has responsibility for ensuring the effectiveness of
those controls.
The Committee reviewed the process by which Group management
assessed the control environment, in accordance with the requirements
of the Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting published by the FRC. This activity
was
{
supported by reports from the Group Audit Director and the Head
of
{
Risk
{
and a range of functional specialists covering areas such as privacy
compliance, treasury policy and the review of internal controls.
As part of the Committee’s recurring agenda items, the Group Security
Director provided a fraud update, the scope of which would include
incidents of fraud involving management or
{
employees with a significant
role in internal controls.
The Group operates a ‘Speak Up’ channel that enables employees to
anonymously raise concerns about possible irregularities. The Committee
received an update on the operation of the channel together with the
output of any resulting investigations.
The Committee has completed its review of the effectiveness of the
Group’s system of internal control, including risk management, during
the
{
year and up to the date of this Annual Report. The review covered
all
{
material controls including financial, operating and compliance
controls. The Committee confirms that the system of internal control
operated effectively for the 2022 financial year. Where specific areas
for
{
improvement were identified, mitigating alternative controls and
processes were in place. This allows us to provide positive assurance
to
{
the Board to help fulfil its obligations under the Code.
Governance (continued)
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87
Vodafone Group Plc
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Compliance with section 404 of the US Sarbanes-Oxley Act
Oversight of the Group’s compliance activities in relation to section 404
of
{
the US Sarbanes-Oxley Act and policy compliance reviews also fall
within the Committee’s remit.
Management is responsible for establishing and maintaining adequate
internal controls over financial reporting and we have responsibility for
ensuring the effectiveness of these controls. The Committee received
updates on the Group’s work in relation to section 404 compliance and
the Group’s broader financial control environment during the year. We
continue to challenge management on ensuring the
{
nature and scope
of
{
control activities evolve to ensure key risks continue to be adequately
mitigated. The ongoing and deeper use of automated controls embedded
within our systems and data analytics is part of the evolution of the
Group’s control
{
environment and was reviewed and discussed by the
Committee at the January 2022 meeting.
The Committee also took an active role in monitoring the Group’s
compliance activities, including receiving reports from management in
the year covering programme-level changes, the scope of compliance
work performed and the results of controls testing. The external auditor
also reports the status of its work in relation to controls in its reports to
the
{
Committee.
External audit
The Committee has primary responsibility for overseeing the relationship
with the external auditor, EY. This includes making the recommendation
on the appointment, reappointment, and removal of
{
the external auditor,
assessing its independence on an ongoing basis, and approving the
statutory audit fee, the scope of the statutory audit and the appointment
of the lead audit engagement partner. Alison Duncan has held this role
for
{
three years since the appointment of EY as external auditor for the
year ended 31 March 2020.
EY presented to the Committee its detailed audit plan for the 2022
financial year, which outlined its audit scope, planning materiality and its
assessment of key audit risks. The identification of key audit risks is critical
in the overall effectiveness of the external audit process and these are
outlined in the Auditor’s report on pages 119 to 128.
The Committee also received reports from EY on its assessment of
the
{
accounting and disclosures in the financial statements and
financial
{
controls.
The Committee will continue to review the auditor appointment and
anticipates that the audit will be put out to tender at least every 10 years.
The Company has complied with the Statutory Audit Services Order 2014
for the financial year under review. The last external audit tender took
place in 2019 which resulted in the appointment of EY.
Independence and objectivity
In its assessment of the independence of the auditor, and in accordance
with the US Public Company Accounting Oversight Board’s (‘PCAOB’)
standard on independence, the Committee received details of all
relationships between the Company and EY that may have a bearing
on
{
its independence and received confirmation from EY that it is
independent of the Company in accordance with US federal securities
law
{
and the applicable rules and regulations of the Securities and
Exchange Commission (‘SEC’) and the PCAOB.
Effectiveness of the external audit process
The Committee reviewed the quality of the external audit process
throughout the
{
year and considered the performance of EY. This
comprised the Committee’s own assessment and the results of a detailed
feedback survey of senior personnel across the Group. Based on these
reviews, the Committee concluded that there had been appropriate
focus
{
and challenge by EY on the primary areas of the audit and that
EY
{
had applied robust challenge and scepticism throughout the audit.
EY audit and non-audit fees
Total fees payable to EY for audit and non-audit services in the year
ended
{
31 March 2022 amounted to €25 million (2021: €32 million).
Non-audit fees for the year ended 31 March 2021 included an amount of
€11 million in relation to the IPO of
{
Vantage Towers A.G. in March 2021.
Audit fees
The Committee reviewed and discussed the fee proposal, was engaged
in
{
agreeing audit scope changes and, following the receipt of formal
assurance that its fees were appropriate for the scope of the work
required, agreed an audit fee of €23 million for statutory audit services
in
{
the year (2021: €21 million).
Non-audit fees
To protect the independence and objectivity of the external auditor, the
Committee has a policy for the engagement of the external auditor to
provide non-audit services. The policy prohibits EY from playing any part
in management or decision-making, providing certain services such as
valuation work and the provision of accounting services. The Group’s
non-audit services policy incorporates the requirements of the FRC’s
Ethical Standard, including a ‘whitelist’ of permitted non-audit services
which mirrors the FRC’s Ethical Standard.
The Committee has pre-approved that EY can be engaged by
management, subject to the policies set out above, and subject to:
–
A €60,000 fee limit for individual engagements;
–
A €500,000 total fee limit for services where there is no legal
alternative; and
–
A €500,000 total fee limit for services where there is no practical
alternative supplier.
For those permitted services that exceed these specified fee limits,
the
{
Committee Chair pre-approves the service.
Non-audit fees were €2 million (2021: €11 million) and represented
9%
{
of
{
audit fees for the 2022 financial year (2021: 52%). See note 3
‘Operating profit’ in the consolidated financial statements.
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Other information
88
Vodafone Group Plc
Annual Report 2022
Governance
In-depth reviews
The Committee requested management to provide in-depth reviews as part of the meeting agendas. These reviews are summarised bel
ow, together
{
with
the Group’s principal risk to which the review relates.
Subject of in-depth review
Principal risk
Cyber threat and information security review with the Chief Technology Officer and the Cyber Security Director.
Cyber threat
Ransomware review with the Chief Technology Officer and Cyber Security Director.
Cyber threat
Deep dive on the remit of the Technology Assurance team with the Chief Technology Officer.
Cyber threat
Technology resilience
and
{
future
{
readiness
Principal risk deep dive with the Global Supply Chain Director.
Supply chain disruption
Principal risk deep dive with the Chief External and Corporate Affairs Officer.
Adverse political and
policy environments
Deep dive into privacy compliance and governance at Vodafone from the Group Privacy Officer.
Adverse political and
policy environments
Update on the European Electronic Communications Code by the Chief External and Corporate Affairs Officer.
Adverse political an
d
policy environments
Review of the opportunities presented by data analytics and digital enablement provided by the Group Financial
Controlling and Operations Director and the Group Internal Audit Director.
Strategic transformation
Updates on the strategic transformation in Germany and partner agencies from the market CEO.
Strategic transformation
Market review of Italy provided by the market CEO.
Strategic transformation
Market review of Spain provided by the market CEO.
Strategic transformation
Market review of the UK provided by the market CEO.
Strategic transformation
Business deep dive of Vantage Towers provided by the CEO and CFO.
Strategic transformation
Market review of Lesotho provided by the market Managing Director.
Strategic transformation
Update on the ‘Trust by Design’ programme from the Group General Counsel and Company Secretary.
Strategic transformation
Deep dive into Vodafone Business provided by the CEO and Legal Director of Vodafone Business.
Strategic transformation
Report from the Europe Cluster CEO and CFO on the controls and risk landscape in the Europe cluster markets.
Strategic transfor
mation
Deep dive of the control environment and compliance from the CEO of Vodafone Egypt.
Strategic transformation
Deep dive into the risk and control environment at _VOIS, the Group’s shared services organisation.
This was provided by the Group’s Director of _VOIS.
Strategic transformation
Review of the long-term viability statement and the going concern assessment with management.
Adverse changes in
macroeconomic conditions
Governance (continued)
Strategic report
Governance
Financials
Other information
89
Vodafone Group Plc
Annual Report 2022
This year, the Board formally approved the
establishment of a new Committee of the Board,
the
b
ESG Committee. The role of the Committee is
to
b
provide oversight of Vodafone’s Environmental,
Social and Governance (
ȁ
ESG’) programme, of
sustainability and responsible business practices,
as
b
well as Vodafone’s contribution to the societies
that we operate in under the social contract.
Chair
Amparo Moraleda
Members
Valerie Gooding
Dame Clara Furse DBE
Key responsibilities
The responsibilities of the Committee are to:
–
Oversee the ESG programme, including the purpose strategy
(Inclusion
{
for All, Planet and Digital Society), sustainability and
responsible business practices, and the social contract;
–
Approve the ESG strategy, including related targets and KPIs, and
monitor progress against key performance indicators and external
ESG
{
index results;
–
Oversee execution of the ESG strategy and related policies and
programmes required to implement the ESG strategy, as well as
the
{
Group’s progress on ESG commitments and targets; and
–
Provide advice and direction to management on implementation of
the
{
ESG strategy, the opportunities and risks to the Group’s operations
and reputation and its corporate responsibility.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Letter from Committee Chair
On behalf of the Board, I am pleased to present Vodafone’s first ESG
Committee Report for the year ended 31 March 2022. ESG is at the
core
{
of our purpose and is a key element in the execution of our strategy.
Reflecting the criticality of ESG and Vodafone’s commitment to this topic,
this year the Board approved the creation of the new ESG Committee to
provide the Board with enhanced oversight of ESG matters. We believe
the ESG Committee will contribute to the long-term success of Vodafone,
for the benefit of our customers, key stakeholders, and the societies in
which we operate.
Some key stakeholder interests considered as part of the Committee include:
–
Investors
: Strong, Board-level ESG governance is a key requirement of
an effective ESG programme;
–
Governments and regulators
: Local and international legal and
regulatory obligations on ESG topics continue to increase;
–
Local communities and NGOs
: ESG topics affect the day-to-day lives
of the people in the communities that we serve;
–
Suppliers and customers
: Upholding high ethical standards
throughout our value chain is critical for stakeholders when deciding
whether they should do business with Vodafone;
–
Employees
: Employees take pride in working for a purpose-driven
organisation that is enabling an inclusive and sustainable digital society.
When establishing the Committee, the Board worked to ensure that
members brought a range of experience on ESG-related topics that fall
within the Committee’s remit. As Chair, I have extensive experience in
this
{
area, and have also been a member of the Board of Trustees of
the
{
Vodafone Foundation since 2020. I’m delighted to be joined on
the
{
Committee by Dame Clara Furse and Valerie Gooding. Dame Clara
Furse is the Chair of the UK Voluntary Carbon Markets Forum and also
provides a valuable investor perspective given her previous executive
and non-executive career. Valerie Gooding serves as the Workforce
Engagement Lead for the Board and regularly engages with employees
throughout the organisation. Valerie is also the Chair of the Remuneration
Committee which introduced ESG measures into our long-term incentive
plan two years ago, following approval by shareholders.
During the year, the Committee met twice. The first meeting in
November
{
2021 focused on reviewing Vodafone’s overall approach to
ESG. This included presentations from Joakim Reiter, Vodafone Group’s
Chief External and Corporate Affairs Officer, as well as the Director of
Investor Relations. The Committee was encouraged by the extent to
which ESG is being integrated into Vodafone’s corporate strategy. It
was
{
also noted that there has been a significant increase in expectations
on ESG performance from key stakeholders in recent years, notably
accelerated by the COVID-19 crisis.
Read more on Vodafone’s approach to ESG
on page 34
The Committee’s second meeting in March 2022 focused on reviewing
Vodafone’s Planet strategy, as we are focused on understanding
climate-related risks and opportunities, and embedding responses to
these into our business strategy and operations. The Committee works
alongside the Audit and Risk Committee in overseeing matters relating
to
{
climate change risk management.
The deep dive into Vodafone’s Planet agenda included an update on
performance, as well as discussion of key challenges and opportunities
relating to Vodafone’s ambitions of becoming net zero by 2040. We
also
{
discussed our programmes enabling our customers to reduce their
carbon emissions, and building more of a circular economy to reduce
network and device electronic waste. The Committee was also given
an
{
insight into how Vodafone’s global strategy is operationalised
locally,
{
through a presentation from Vodafone Germany’s CEO,
Hannes
{
Ametsreiter.
Read more on Vodafone’s Planet strategy and targets
on page 41
On behalf of the Committee, I have reported the Committee’s work to the
Board. Over the next year, I look forward to the Committee’s continued
oversight and scrutiny of Vodafone’s ESG agenda, including further
presentations from senior executives and experts from across the Group.
During FY23, the Committee will review Vodafone’s Inclusion for All and
human rights agendas, and will consider how the Vodafone’s ESG strategy
is implemented across Africa through the Vodacom Group.
As Committee Chair, I will also be available to engage with shareholders
who have questions or comments about the work of the Committee at
our 2022 AGM.
Amparo Moraleda
On behalf of the ESG Committee
17 May 2022
ESG Committee
Scan or click to watch the Chair of the
ESG Committee explain her role:
investors.vodafone.com/videos
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Other information
90
Vodafone Group Plc
Annual Report 2022
Governance
Read more
Read more
Read more
Environment
Energy consumption and GHG
{
emissions
Including energy sources, uses and targets
E-waste and other environmental topics
Including device and network waste, water and plastics
Environmental benefits from
products & services
Including carbon & resource efficiency enablement
Climate change risk management
Including alignment with TCFD recommendations
Social
Health and safety
Diversity & inclusion and
employee experience
Employee rights
Including collective bargaining, grievance mechanisms,
Speak Up, Fair Pay, and labour standards
Responsible supply chain
Including labour standards and sourcing of minerals
Human and digital rights
Including privacy regulations, right to privacy and
freedom of expression, and other human rights
Socio-economic benefits from
products & services
Including digital inclusion
Governance
Mobile, masts and health
Security
Including cyber and other security topics
Anti-bribery and corruption
Business conduct & ethics
Including taxation, business conduct and compliance
Corporate governance
Reporting
Including Annual Report and Accounts, Modern Slavery
Statement and other voluntary ESG disclosures
Focus during the year
The ESG Committee met twice during the year ended 31 March 2022.
The following provides a summary of the topics covered.
November 2021
–
Approval of the Committees Terms of Reference, along with a
discussion on the purpose and expected remit of the ESG Committee.
–
Joakim Reiter, Vodafone Group’s Chief External and Corporate Affairs
Officer, presented a paper on the annual overview of political, policy
and regulatory trends which had been provided to the Board of
Vodafone Group Plc at its July 2021 meeting. The paper outlined the
key impacts of the COVID-19 pandemic on the political and regulatory
environment and the accelerated changes in expectations on
businesses post-pandemic.
–
Joakim Reiter and Vodafone Group’s Investor Relations Director
presented on Vodafone’s ESG approach. This outlined how Vodafone’s
approach to ESG was a core part of the corporate strategy and a driver
of commercial success. The discussion outlined how Vodafone’s ESG
approach brings together five key programmes:
1.
Purpose
and the actions Vodafone takes as part of the three
purpose pillars (Digital Society, Inclusion for All and Planet);
2.
Social contract
, which was a key growth lever for the Company
as
{
a whole;
3.
Responsible business practices
, to ensure Vodafone operates
to
{
the highest standards of integrity and ethics, ensuring that
Vodafone is ’Doing What’s Right’ towards employees, customers,
society and suppliers;
4.
Transparency
, including providing correct disclosures and
reporting as well as external positioning, engagement and
communication on all material ESG aspects; and
5.
Measurement
, as Vodafone’s performance is measured in
various
{
ways covering different audiences and target groups.
March 2022
–
Presentation to the Committee on Vodafone’s Planet approach and
performance. This included an outline of how Vodafone activates
the
{
strategy for different stakeholder groups, including consumers,
regulators and investors. Joakim Reiter presented on Vodafone’s
approach to reaching net zero carbon emissions by 2040, including
progress to date and some of the challenges.
–
The Committee was joined by relevant senior representatives from
within Vodafone (Vodafone Group’s Marketing and Brand Director
and
{
Device Operations Director and Vodafone Business’ Legal Director).
The
{
discussion focused on Vodafone’s approach to building more of
a
{
circular economy for devices and activating its Planet strategy for
consumers. The Committee were also updated on Vodafone’s carbon
enablement and ‘digital for green’ strategy.
–
Hannes Ametsreiter (Vodafone Germany CEO) provided the
Committee with an overview of how Vodafone’s global Planet strategy
is implemented locally in Germany, through Vodafone Germany’s
‘GigaGreen’ programme.
–
The ESG Committee discussed Vodafone’s approach to FY22 year-end
ESG reporting and assurance.
Key focus for the next year
The key areas of focus for the next year:
–
Deep dives into Inclusion for All and Digital Society purpose pillars;
–
Review of Vodafone’s approach to human rights, including associated
governance and reporting;
–
Further understanding of operationalisation of ESG approach across
the business, with a focus on Vodacom; and
–
Continuing to review progress of ESG strategy, including performance
against external targets and ESG indices and rankings.
Mapping of ESG topics
When establishing the ESG Committee and setting its remit, we
completed a mapping of all key ESG topics for Vodafone, to ensure
clarity on the role of the ESG Committee alongside the Board and
other relevant Committees. This is presented below, alongside further
details of each ESG topic.
42
43
43
66
56
55
35
Key
Audit and Risk Committee
ESG Committee
Nominations and
Governance Committee
Full Board
A
N
E
B
68
56
49
53
44
36
54
47
55
47
39
52
Governance (continued)
E
E
E
A
E
B
A
B
B
E
A
E
E
B
A
B
A
A
N
B
B
E
A
41
Strategic report
Governance
Financials
Other information
91
Vodafone Group Plc
Annual Report 2022
Letter from the Remuneration
Committee Chairman
On behalf of the Board, I present our 2022
Directors’ Remuneration Report.
This report includes both our Policy Report (as approved by shareholders
at the 2020 AGM), and our 2022 Annual Report on Remuneration, which
sets out how our policy was implemented during the year under review,
and how it will be applied for the year ahead.
Activities during the year
During the last year, we have demonstrated consistent and sustainable
growth and have continued to deliver against our purpose and strategy,
keeping society connected during recent volatile and critical times.
As we start to move forward after the COVID-19 pandemic, we will
continue to support our people and in my role as Workforce Engagement
Lead I have heard how our response to the pandemic provided support
and clarity to our colleagues during this period. Our actions ensured that
no employees were furloughed whilst we also continued to run global
all-employee pay programmes, including the delivery of performance
related pay across our business. We also enhanced our working from
home capabilities and given we are able to meet and collaborate in
person again, we are moving to a flexible hybrid working policy which
blends the best of both home and office working.
Looking specifically at executive remuneration, in implementing the
current policy during the year the Committee has continued to consider
the experience of wider stakeholders when determining matters including
executive salaries, incentive outcomes, and package structures, with all
such decisions aligned with our shareholder approved Remuneration
Policy and the Committee’s principles. These principles aim to ensure
our
{
pay arrangements drive the delivery of our strategy, are aligned with
performance, encourage shareholder alignment, and support our Fair Pay
principles – further details can be found online using the link at the top of
this page.
Alignment with our strategic framework
Ensuring our Remuneration Policy supports and drives our wider business
strategy remains a core focus of the Committee. Our vision is to become
a
{
new generation connectivity and digital services provider for Europe and
Africa, which will enable an inclusive and sustainable digital society. We
are focused on growing our converged connectivity markets in Europe
and mobile data and payments in Africa, reflecting our three core
customer segments of Europe Consumer, Africa Consumer, and
Vodafone
{
Business.
To enable us to meet this objective, our strategic priorities are to
become
{
a simplified and efficient operator, to maintain our leading
gigabit
{
networks, and to shape the digital society through our role in
influencing policy and regulation. These priorities require us to deliver
sustainable growth, leverage our scale to deliver efficiencies and value
creation, and to continue to optimise our portfolio.
The importance of our strategic framework is reflected in the inclusion
of
{
the free cash flow measure in both our short-term and long-term
incentive plans, with cash generation remaining a key driver of value
creation in our business. Service revenue and adjusted EBIT also continue
to be important financial measures in our short-term incentive plan, both
for measuring the impact of our strategic growth initiatives and in helping
us deliver long-term value to our shareholders.
Our growth plan is built around deepening the trusted relationships with
consumers and business customers and the importance of customer
relationships is reflected in the inclusion of
{
a
{
customer appreciation
metric in our short-term incentive.
Engagement during the year
It is the Committee’s strong belief that through constructive engagement
the
{
relationship between the Committee and shareholders is mutually
beneficial. Our 2020 Policy Report was approved by over 96% of
shareholders,
reflecting the importance and effectiveness of two-way
dialogue during such consultations.
The Committee remains satisfied that the current policy is operating
effectively. Our Remuneration Policy will next be reviewed ahead of
its
{
submission for shareholder approval at the 2023 AGM following
the
{
conclusion of its full three-year term. Shareholder consultation will
form an important part of the Committee’s review over the course of
the
{
next year.
In terms of engaging the employee voice, as Workforce Engagement
Lead
{
I attended meetings with both our European and South African
forums, with feedback and comments from the meetings subsequently
reported back directly to the Board. The key topics raised by employee
representatives this year focused on our Future Ready ways of working,
our response to COVID-19 and the progress on our Fair Pay agenda.
I
{
would like to thank the representatives from both forums for inviting
me
{
and for contributing to the discussions.
When looking at the feedback from these forums and our other
channels
{
of engagement it is evident that our colleagues value the
open
{
and regular updates the business has given throughout the year,
and the Board will ensure these continue in the year ahead.
Read more about our stakeholder engagement activities
on
b
pages 14 to 15 of this Annual Report
Arrangements for 2023
Base salary and pension arrangements
The base salaries for both Executive Directors have been frozen since their
respective appointments in 2018.
As set out in last year’s Directors’ Remuneration Report, the Committee
agreed during the 2021 review that salary increases for both individuals
were warranted – however, given the context of COVID-19 and wider
budgetary restraint shown at leadership level it was decided that both
salaries would remain unchanged and that the position would be
reviewed again in 2022.
Following this year’s review the Committee concluded that
{
in light of their
experience it
{
was appropriate to increase the salaries of both Executive
Directors.
{
The
{
Committee discussed the matter in detail and, despite the
rationale for more significant adjustments, agreed that for 2022 the most
appropriate decision was for the increases to be aligned with the wider UK
workforce budget. The salaries for both Executive Directors will therefore
be increased by 3% effective from 1 July 2022.
The Committee is conscious of the importance of our executive
remuneration arrangements remaining fair and competitive and will
re-visit this topic again as part of the next review in 2023 to determine
if
{
any further adjustments are required.
Pension arrangements for both Executive Directors will continue to
remain aligned with the wider UK workforce at 10% of base salary.
Remuneration Committee
Scan or click to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role:
investors.vodafone.com/videos
Strategic report
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Other information
92
Vodafone Group Plc
Annual Report 2022
Governance
Annual bonus (‘GSTIP’)
At the January 2022 meeting, the Committee agreed that the performance
conditions and their respective weightings for 2023 should remain
unchanged from 2022.
The measures under the annual bonus of service revenue, adjusted free
cash flow, adjusted EBIT, and customer appreciation KPIs will continue to
be equally weighted at 25% for the 2023 plan.
Global long-term incentive (‘GLTI’)
The GLTI structure will also remain unchanged for 2023, in line with our
agreed normal policy. The measures under the long-term incentive will
continue to be weighted at 60% adjusted free cash flow, 30% relative
TSR
{
and 10% ESG.
Read more
on pages 110 and 111
Performance outcomes during 2022
GSTIP performance (1 April 2021 – 31 March 2022)
Annual bonus performance during the year was measured against
both
{
financial and strategic measures. The four measures were equally
weighted at 25% each, with financial metrics constituting service revenue,
adjusted EBIT and adjusted free cash flow whilst the strategic measure
was linked to customer appreciation KPIs. These KPIs covered metrics
including churn, revenue market share, and net promoter score.
Performance under both the financial performance measures and the
customer appreciation KPIs metrics was above the midpoint of the target
range. The combined performance resulted in an overall bonus payout
of
{
69.2% of maximum. Further details on performance can be found on
pages 100 and 101.
GLTI performance (1 April 2019 – 31 March 2022)
The 2020 GLTI award (granted June 2019) was subject to adjusted
free
{
cash flow (2/3 of total award) and relative TSR (1/3 of total award)
performance. Both performance conditions were measured over the
three-year period ending 31 March 2022.
Final FCF performance finished below the mid-point of the range resulting
in 29.2% of the FCF element vesting. TSR performance was above the
median of the peer group resulting in vesting just above threshold
under
{
this element. This resulted in an overall vesting percentage of
26.1% of
{
maximum. Further details of this vesting calculation can be
found on pages 101 and 102.
Consideration of discretion
The Committee reviewed the appropriateness of the outcomes of
both
{
the annual bonus and long-term incentive plan in light of both
the
{
relevant performance targets and the wider financial and business
performance across the respective measurement periods. Outcomes
were reviewed against the wider employee experience during the
periods
{
under review with the Committee noting that global employee
pay reviews, including the delivery of performance-related pay, had been
undertaken throughout the COVID-19 pandemic and was also scheduled
for later in 2022. It was agreed that the outcomes were appropriate and
that no adjustments were required.
Looking forward
Over the course of the next 12 months the Committee will be reviewing
the current Remuneration Policy ahead of its submission for approval at
the 2023 AGM in line with regulatory requirements and I look forward to
engaging with you, our shareholders, ahead of this date. As per previous
reviews, the Committee will ensure sufficient time is allocated for
consultation prior to the policy being finalised for approval.
The rest of this report sets out both our Policy Report, as approved at the
2020 AGM, and our Annual Report on Remuneration which sets out the
decisions and outcomes summarised in this letter in further detail.
Valerie Gooding
Chairman of the Remuneration Committee
17 May 2022
Remuneration at a glance
Component
2022 (year ending 31 March 2022)
2023 (year ending 31 March 2023)
Fixed pay
Base salary
Effective 1 July 2021:
Chief Executive: £1,050,000 (no increase).
Chief Financial Officer: £700,000 (no increase).
Effective 1 July 2022:
Chief Executive: £1,081,500 (3.0% increase)
Chief Financial Officer: £721,000 (3.0% increase)
Benefits
Travel related benefits and private medical cover.
Travel related benefits and private medical cover.
Pension
Pension contribution of 10% of salary for all
Executive
{
Directors.
Pension contribution of 10% of salary for all
Executive
{
Directors.
Annual bonus
GSTIP
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Measures:
Service revenue (25%), adjusted EBIT (25%), adjusted FCF
(25%), and customer appreciation KPIs (25%).
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Measures:
Service revenue (25%), adjusted EBIT (25%), adjusted FCF
(25%), and customer appreciation KPIs (25%).
Long-term incentive
GLTI
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Measures:
Adjusted free cash flow (60%) , relative TSR (30%),
and ESG (10%).
Performance/holding periods:
Three-year performance + two-year holding period.
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Measures:
Adjusted free cash flow (60%) , relative TSR (30%),
and ESG (10%).
Performance/holding periods:
Three-year performance + two-year holding period.
Remuneration Committee (continued)
Strategic report
Governance
Financials
Other information
93
Vodafone Group Plc
Annual Report 2022
Remuneration Policy
Remuneration Policy – notes to reader
No changes have been made to our policy since its approval at the 2020 Annual General Meeting which was held on 28 July 2020. O
ur approved
Policy
{
Report is available on our website at vodafone.com, and has been reproduced below in the shaded boxes exactly as it was set out
in the
2020
{
Annual Report. As such, some of the policy wording is now out of date; this includes references to the 2020 Annual General Meet
ing and
page
{
number references.
Remuneration Policy
In this forward-looking section we describe our Remuneration Policy for the Board. This includes our considerations when determining policy,
a
{
description of the elements of the reward package, including an indication of the potential future value of this package for ea
ch of the
Executive
{
Directors, and the policy applied to the Chairman and Non-Executive Directors.
We will be seeking shareholder approval for our Remuneration Policy at the 2020 AGM and we intend to implement it at that point. A summary
and
{
explanation of the proposed changes to the current Remuneration Policy is provided on page 100. Subject to approval, we will review our policy
each year to ensure that it continues to support our company strategy and if it is necessary to make a change to our policy within the next three years,
we
{
will seek shareholder approval.
Considerations when determining our Remuneration Policy
Our remuneration principles which are outlined on page 97 guide the Remuneration Committee when making decisions on our policy and its
implementation. A critical consideration for the Remuneration Committee when determining our Remuneration Policy is to ensure that it supports
our
{
company purpose, strategy, and business objectives.
A variety of stakeholder views are taken into account when determining executive pay, including those of our shareholders, colleagues, and external
bodies. Further details on how we engage with, and consider the views of, each of these stakeholders are set out on page 115.
In advance of submitting our policy for shareholder approval we ran a thorough consultation exercise with our major shareholders. We invited our
{
top
20 shareholders and a number of key governance stakeholders to comment on remuneration at Vodafone and to provide feedback on
{
the proposed
changes to the current policy which was approved at the 2017 AGM. A number of meetings between shareholders and the Remuneration Committee
Chairman took place during this consultation period. Further details of this consultation are provided on pages 97 and
{
98 whilst a summary of the
proposed changes to our current policy, which are incorporated in this revised Remuneration Policy report, is
{
provided on page 100.
Listening to and consulting with our employees is very important and the Committee is supportive of the growing focus on engaging the employee
voice, which has accompanied recent changes to the UK Corporate Governance Code. Our engagement with colleagues can take different forms in
different markets but includes a variety of channels and approaches including our annual people survey which attracts very high
{
levels of participation
and engagement, regular business leader Q&A sessions, and a number of internal digital communication platforms.
Our Senior Independent Director also undertakes an annual attendance at our European employee forum, and a similar body in South Africa, with
{
any
questions or concerns raised by the employee representatives fed back directly to the Board for consideration and discussion.
We do not formally consult directly with employees on the executive Remuneration Policy nor is any fixed remuneration comparison measurement
used. However, when determining the policy for Executive Directors, the Remuneration Committee is briefed on pay and employment conditions of
employees in Vodafone Group as a whole, with particular reference to the market in which the executive is based. Further information on our approach
to remuneration for other employees is given on page 105.
Performance measures and targets
Our Company strategy and business objectives are the primary consideration when we are selecting performance measures for our incentive plans.
The targets within our incentive plans that are related to internal financial measures (such as revenue, profit and cash flow) are typically determined
based on our budgets. Targets for strategic and external measures (such as customer appreciation KPIs, ESG measures, and total shareholder
return
{
(‘TSR’)) are set based on company objectives and in light of the competitive marketplace. The threshold and maximum levels of
{
performance
are set to reflect minimum acceptable levels at threshold and very stretching levels at maximum.
As in previous Remuneration Reports we will disclose the details of our performance targets for our short and long-term incentive plans. However, our
annual bonus targets are commercially sensitive and therefore we will only disclose our targets in the Remuneration Report following the completion
of the financial year. We will normally disclose the targets for each long-term award in the Remuneration Report for the financial year preceding
the
{
start of the performance period – where this is not possible, such targets will be disclosed at the time of grant and published in the next
Remuneration Report.
At the end of each performance period we review performance against the targets, using judgement to account for items such as (but not limited
to)
{
mergers, acquisitions, disposals, foreign exchange rate movements, changes in accounting treatment, material one-off tax settlements etc.
The
{
application of judgement is important to ensure that the final assessments of performance are fair and appropriate.
Strategic report
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Other information
94
Vodafone Group Plc
Annual Report 2022
Governance
Remuneration Policy (continued)
Malus and clawback
In addition, the Remuneration Committee reviews the incentive plan results before any payments are made to executives or any shares vest and has
full discretion to adjust the final payment or vesting downwards if they believe circumstances warrant it. In particular, the Committee has the discretion
to use either malus or clawback as it sees appropriate. In the case of malus, the award may lapse wholly or in part, may vest to a lesser extent than it
would otherwise have vested or vesting may be delayed.
In the case of clawback, the Committee may recover bonus amounts that have been paid up to three years after the relevant payment date, or
{
recover
share awards that have vested up to five years after the relevant grant date. The key trigger events for the use of the clawback arrangements include
material misstatement of performance, material miscalculation of performance condition outcomes, gross misconduct, and
{
reputational damage.
Subject to approval of this Remuneration Policy, these arrangements will be applicable to all bonus amounts paid, or share awards granted, following
the 2020 AGM. The current clawback arrangements, which are set out in the Remuneration Policy approved by shareholders at the 2017 AGM, have
been applicable to all bonus amounts paid, or share awards granted, since the 2017 AGM.
The Remuneration Policy table
The table below summarises the main components of the reward package for Executive Directors.
Fixed pay:
Base salary
Purpose and link
to
{
strategy
To attract and retain the best talent
Operation
Salaries are usually reviewed annually and fixed for 12
{
months commencing 1 July. Decision is influenced by:
–
level of skill, experience and scope of responsibilities of
{
individual;
–
business performance, scarcity of talent, economic climate and market conditions;
–
increases elsewhere within the Group; and
–
external comparator groups (which are used for reference purposes only) made up of companies of
{
similar size
and
{
complexity to Vodafone.
Opportunity
Average salary increases for existing Executive Committee members (including Executive Directors) will not normally
exceed average increases for employees in other appropriate parts of the Group. Increases above this level may be made
in
{
specific situations. These situations could
{
include (but are not limited to) internal promotions, changes to role, material
changes to the business and exceptional company performance.
Performance metrics
None.
Fixed pay:
Pension
Purpose and link
to
{
strategy
To remain competitive within the marketplace
Operation
–
Executive Directors may choose to participate in the defined contribution pension scheme or to receive a cash allowance
in
{
lieu of pension.
Opportunity
–
The pension contribution or cash payment is equal to the maximum employer contribution available to our UK
employees under our Defined Contribution scheme (currently 10% of annual gross salary).
Performance metrics
None.
Fixed pay:
Benefits
Purpose and link
to strategy
To aid retention and remain competitive within the marketplace
Operation
–
Travel related benefits. This may include (but is not limited to) company car or cash allowance, fuel and access to a driver
where appropriate.
–
Private medical, death and disability insurance and annual health checks.
–
In the event that we ask an individual to relocate we would offer them support in line with Vodafone’s relocation or
international assignment policies. This may cover (but is not limited to) relocation, cost of living allowance, housing,
home
{
leave, education support, tax equalisation and advice.
–
Legal fees if appropriate.
–
Other benefits are also offered in line with the benefits offered to other employees, for example, our all-employee share
plan, mobile phone discounts, maternity/paternity benefits, sick leave, paid holiday, etc.
Opportunity
–
Benefits will be provided in line with appropriate levels indicated by local market practice in the country of employment.
–
We expect to maintain benefits at the current level but the value of benefit may fluctuate depending on, amongst other
things, personal situation, insurance premiums and other external factors.
Performance metrics
None.
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95
Vodafone Group Plc
Annual Report 2022
Annual bonus –
Global Short-Term Incentive Plan (‘GSTIP’)
Purpose and link
to strategy
To drive behaviour and communicate the key priorities for the year.
To motivate employees and incentivise delivery of performance over the one year operating cycle.
The financial metrics drive our growth strategies whilst also focusing on improving operating efficiencies.
The
{
strategic measures aim to ensure a great customer experience remains at the heart of what we do.
Operation
–
Bonus levels and the appropriateness of measures and weightings are reviewed annually to ensure they continue to
support our strategy.
–
Performance over the financial year is measured against stretching financial and non-financial performance targets set
at
{
the start of the financial year.
–
The annual bonus is usually paid in cash in June each year for performance over the previous year. A mandatory deferral
of 25% of post-tax bonus earned into shares for two years will normally apply except where an executive has met or
exceeded their share ownership requirement.
Opportunity
–
Bonuses can range from 0–200% of base salary, with 100% paid
{
for on-target performance. Maximum is only paid out for
exceptional performance.
Performance metrics
–
Performance over each financial year is measured against stretching targets set at the beginning of the year.
–
The performance measures normally comprise a mix of financial and strategic measures. Financial measures may
include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures
may include (but are not limited to) customer appreciation KPIs such as churn, revenue market share, and NPS.
Long-term incentive –
Global Long-Term Incentive Plan (‘GLTI’)
Purpose and link
to strategy
To motivate and incentivise delivery of
{
sustained performance over the long term.
To support and encourage greater shareholder alignment through a high level of
{
personal share
{
ownership.
The use of free cash flow as the principal performance measure ensures we apply prudent cash management
and rigorous capital discipline to our investment decisions.
The use of TSR along with a performance period of not less than three years means that we are focused on
{
the
long-term interests of our shareholders.
Operation
–
Award levels and the framework for determining vesting are reviewed annually.
–
Long-term incentive awards consist of shares subject to performance conditions which are granted each year.
–
Awards will normally vest not less than three years after the respective award grant date based on Group performance
against the performance metrics set out below. In exceptional circumstances, such as but not limited to where a delay to
the grant date is required, the Committee may set a vesting period of less than three years, although awards will continue
to be subject to a performance period of at least three years.
–
All post-tax shares are subject to a mandatory two year holding from the date of vest prior to release.
–
Dividend equivalents are paid in cash after the vesting date.
Opportunity
–
Maximum long-term incentive face value at award of 500% of base salary for the Chief Executive and 450% for other
Executive Directors.
–
Threshold long-term incentive face value at award is 20% of maximum opportunity. Minimum vesting is 0% of maximum
opportunity. Awards vest on a straight-line basis between threshold and maximum.
–
The Committee has the discretion to reduce long-term incentive grant levels for Directors who have neither met their
shareholding guideline nor increased their shareholding by 100% of salary during the year.
–
The awards that vest accrue cash dividend equivalents over the three year vesting period.
–
Awards vest to the extent performance conditions are satisfied.
Performance metrics
–
Performance is measured against stretching targets set at the time of grant.
–
Vesting is determined based on the following measures: adjusted free cash flow as our operational performance
measure, relative TSR against a peer group of companies as our external performance measure, ESG as a measure of our
external impact and commitment to our purpose.
–
Weightings will be determined each year and will normally constitute 60% on adjusted free cash flow, 30% on relative
total shareholder return, and 10% on ESG. The Committee will determine the actual weighting of an award prior to grant,
taking into account all relevant information.
Strategic report
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Other information
96
Vodafone Group Plc
Annual Report 2022
Governance
Remuneration Policy (continued)
Notes to the Remuneration Policy table
Existing arrangements
We will honour existing awards, incentives, benefits and contractual arrangements made to individuals prior to their promotion to the Board and/
or
{
prior to the approval and implementation of this policy. For the avoidance of doubt this includes payments in respect of any award granted under
any previous Remuneration Policy. This will last until the existing incentives vest (or lapse) or the benefits or contractual arrangements no longer apply.
Long-term incentive (‘GLTI’)
When referring to our long-term incentive awards we use the financial year end in which the award was made. For example, the “2020 award”
was
{
made in the financial year ending 31 March 2020. The awards are usually made in the first half of the financial year.
The extent to which awards vest depends on three performance conditions:
–
underlying operational performance as measured by adjusted free cash flow;
–
relative Total Shareholder Return (‘TSR’) against a peer group median; and
–
performance against our Environmental, Social, and Governance (‘ESG’) targets.
Adjusted free cash flow
The free cash flow performance is based on the cumulative adjusted free cash flow figure over the performance period. The detailed targets and
the
{
definition of
{
adjusted free cash flow are determined each year as appropriate. The target adjusted free cash flow level is set by reference t
o
our
{
long-range plan and market expectations. We consider the targets to be critical to the Company’s long-term success and its ability to maximise
shareholder value, and to be in line with the strategic goals of the Company. The Remuneration Committee sets these targets to be sufficiently
demanding with significant stretch where only outstanding performance will be rewarded with a maximum payout.
The cumulative adjusted free cash flow vesting levels as a percentage of the award subject to this performance element are shown in the table below
(with linear interpolation between points):
Performance
Vesting percentage
(% of FCF element)
Below threshold
0%
Threshold
20%
Maximum
100%
TSR outperformance of a peer group median
We have a limited number of appropriate peers and this makes the measurement of a relative ranking system volatile. As such, the outperformance of
the median of a peer group is felt to be the most appropriate TSR measure. The peer group for the performance condition
{
is reviewed each year and
amended as appropriate.
The TSR vesting levels as a percentage of the award subject to this performance element are shown in the table below (with linear interpolation
between points):
Vesting percentage
(% of TSR element)
Below median
0%
Median
20%
Percentage outperformance of the peer group median equivalent to 80th percentile
100%
In order to determine the percentages for the equivalent outperformance levels above median, the Remuneration Committee seeks independent
external advice.
ESG performance
Our ESG targets will be set on an annual basis (as per the approach for our other performance measures), and will be aligned to our externally
communicated ambitions in this area. Where performance is below the agreed ambition, the Committee will use its discretion to assess vesting
based
{
on performance against the stated ambition and any other relevant information.
Remuneration policy for other employees
While our remuneration policy follows the same fundamental principles across the Group, packages offered to employees reflect differences in
market
{
practice in the different countries, role and seniority.
For example, the remuneration package elements for our Executive Committee are essentially the same as for the Executive Directors with
some
{
minor differences, for example smaller levels of share awards and local variances where appropriate. The remuneration for the next level
of
{
management, our senior leadership team, again follows the same principles with local and individual performance aspects in the
annual bonus
targets and performance share awards. They also receive lower levels of share awards which are partly delivered in conditional share awards without
performance conditions.
Strategic report
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Other information
97
Vodafone Group Plc
Annual Report 2022
Estimates of total future potential remuneration from 2021 pay packages
The tables below provide estimates of the potential future remuneration for each of the Executive Directors based on the remuneration opportunity
to
{
be granted in the 2021 financial year. Potential outcomes based on different performance scenarios are provided for each Executive Director.
The assumptions underlying each scenario are described below
1
.
Fixed
Consists of base salary, benefits and pension.
Base salary is at 1 July 2020.
Benefits are valued using the figures in the total remuneration for the 2020 financial year table on page 109 (of the 2020 report).
Pensions are valued by applying cash allowance rate of 10% of base salary at 1 July 2020.
Base
(£’000)
Benefits
(£’000)
Pension
(£’000)
Total fixed
(£’000)
Chief Executive
1,050
42
105
1,197
Chief Financial Officer
700
22
70
792
Mid-point
Based on what a Director would receive if performance was in line with plan.
The opportunity for the annual bonus (‘GSTIP’) is 100% of base salary under this scenario.
The opportunity for the long-term incentive (‘GLTI’) reflects assumed achievement mid-way between threshold and
maximum
{
performance.
Maximum
The maximum award opportunity for the GSTIP is 200% of base salary.
The maximum GLTI opportunity reflects full vesting based on the maximum award levels set out in this Remuneration Policy
(i.e. 500% of base salary for the Chief Executive and 450% of base salary for the Chief Financial Officer).
All scenarios
Long-term incentives consist of share awards only which are measured at face value i.e. no assumption for cash dividend
equivalents
{
payable.
22%
22%
14%
14%
11%
11%
£11,172
£11,172
70%
70%
£8,547
£8,547
£5,397
£5,397
58%
58%
£1,197
£1,197
61%
61%
Mid-point
Maximum
Maximum
(assuming 50%
share price growth)
Fixed
Salary, Bene
Ż
ts, and Pension
Annual Bonus
Long-Term Incentive
19%
19%
25%
25%
20%
20%
Nick Read
Chief Executive
£’000
23%
23%
15%
15%
12%
12%
£6,917
£6,917
68%
68%
£5,342
£5,342
59%
59%
£3,382
£3,382
56%
56%
£792
£792
Mid-point
Maximum
Maximum
(assuming 50%
share price growth)
Fixed
Salary, Bene
Ż
ts, and Pension
Annual Bonus
Long-Term Incentive
20%
20%
26%
26%
21%
21%
Margherita Della Valle
Chief Financial Of
Ż
cer
£’000
Note:
1.
In line with UK reporting requirements, the fourth bar in each chart reflects the same assumptions as per the Maximum scenario but with an assumed share price increase of 50% (which
{
subsequently
increases the hypothetical value of the long-term incentive under this scenario by the same percentage).
Recruitment remuneration
Our approach to recruitment remuneration is to pay no more than is necessary and appropriate to attract the right talent to the role.
The Remuneration Policy table (pages 103 and 104) sets out the various components which would be considered for inclusion in th
e remuneration
package for the appointment of an Executive Director. Any new Director’s remuneration package would include the same elements, and be subject to
the same constraints, as those of the existing Directors performing similar roles. This means a potential maximum bonus opportunity of 200% of base
salary and long-term incentive maximum face value of opportunity at award of 500% of base salary.
When considering the remuneration arrangements of individuals recruited from external roles to the Board, we will take into account the remuneration
package of that individual in their prior role. We only provide additional compensation to individuals for awards foregone. If necessary we will seek to
replicate, as far as practicable, the level and timing of such remuneration, taking into account also any remaining performance requirements applying
to it. This will be achieved by granting awards of cash or shares that vest over a timeframe similar to those forfeited and if appropriate based on
performance conditions. A commensurate reduction in quantum will be applied where it is determined that the new awards are either not subject
to
{
performance conditions or subject to performance conditions that are not as stretching as those of the awards forfeited.
Service contracts of Executive Directors
Executive Directors contracts have rolling terms and are terminable on no more than 12
{
months’ notice.
The key elements of the service contract for executives relate to remuneration, payments on loss of office (see below), and restrictions during active
employment (and for 12 months thereafter). These restrictions include non-competition, non-solicitation of customers and employees etc.
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Vodafone Group Plc
Annual Report 2022
Governance
Treatment of corporate events
All of the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become
exercisable on a change of control to the extent that any performance condition has been satisfied and pro-rated to reflect the acceleration of vesting,
unless the Committee determines otherwise.
In the event of a demerger, distribution (other than an ordinary dividend) or other transaction which would affect the current or future value of any
award, the Committee may allow awards to vest on the same basis as for a change of control described above. Alternatively, an adjustment may be
made to the number of shares if considered appropriate.
Payments for departing Executive Directors
In the table below we summarise the key elements of our policy on payment for loss of office. We will of course, always comply both with the relevant
plan rules and local employment legislation.
Provision Policy
Notice period and
compensation for
loss
{
of
{
office in
service
{
contracts
–
12 months’ notice from the Company to the Executive Director.
–
Up to 12 months’ base salary (in line with the notice period). Notice period payments will either be made as normal
(if
{
the
{
executive continues to work during the notice period or is on gardening leave) or they will be made as monthly
payments in lieu of notice (subject to mitigation if alternative employment is obtained).
Treatment of annual
bonus (‘GSTIP’) on
termination under
plan
{
rules
–
The annual bonus will be pro-rated for the period of service during the financial year and will reflect the extent to which
Company performance has been achieved.
–
The Remuneration Committee has discretion to reduce the entitlement to an annual bonus to reflect the individual’s
performance and the circumstances of the termination.
Treatment of unvested
long-term incentive
awards (‘GLTI’)
on
{
termination
under
{
plan
{
rules
–
An Executive Director’s award will vest in accordance with the terms of the plan and satisfaction of performance
conditions measured at the normal completion of the performance period, with the award pro-rated for the proportion
of
{
the vesting period that had elapsed at the date of cessation of employment.
–
The Remuneration Committee has discretion to vary the level of vesting as deemed appropriate, and in particular to
determine that awards should not vest for reasons which may include, at their absolute discretion, departure in case
of
{
poor performance, departure without the agreement of the Board, or detrimental competitive activity.
Pension and benefits
–
Generally pension and benefit provisions will continue to apply until the termination date.
–
Where appropriate other benefits may be receivable, such as (but not limited to) payments in lieu of accrued holiday
and
{
legal fees or tax advice costs in relation to the termination.
–
Benefits of relative small value may continue after termination where appropriate, such as (but not limited to) mobile
phone provision.
In exceptional circumstances, an arrangement may be established specifically to facilitate the exit of a particular individual albeit that any such
arrangement would be made within the context of minimising the cost to the Group. We will only take such a course of action in exceptional
circumstances and where it is considered to be in the best interests of shareholders.
Chairman and Non-Executive Directors’ remuneration
Our policy is for the Chairman to review the remuneration of Non-Executive Directors annually following consultation with the Remuneration
Committee Chairman. Fees for the Chairman are set by the Remuneration Committee.
Element
Policy
Fees
–
We aim to pay competitively for the role including consideration of the time commitment required. We benchmark the fees against
an appropriate external comparator group. We pay a fee to our Chairman which includes fees for chairmanship of any
{
committees.
We pay a fee to each of our other Non-Executive Directors and they receive an additional fee if they chair a committee and/or
hold
{
the position of Senior Independent Director. Non-executive fee levels are set within the maximum level as approved by
shareholders as part of our Articles of Association. We review the structure of fees from time to time and may, as appropriate, make
changes to the manner in which total fees are structured, including but not limited to any additional chair or membership fees.
Allowances
–
Under a legacy arrangement, an allowance is payable each time certain non-Europe-based Non-Executive Directors are required
to
{
travel to attend Board and committee meetings to reflect the additional time commitment involved.
Incentives
–
Non-Executive Directors do not participate in any incentive plans.
Benefits
–
Non-Executive Directors do not participate in any benefit plans. The Company does not provide any contribution to their
pension
{
arrangements. The Chairman is entitled to the use of a car and a driver whenever and wherever he is providing
his
{
services
{
to or representing the
{
Company. We have been advised that for Non-Executive Directors, certain travel and
accommodation expenses in
{
relation to attending Board meetings should be treated as a taxable benefit therefore we also
cover
{
the tax liability for these expenses.
Non-Executive Director letters of appointment
Non-Executive Directors are engaged on letters of appointment that set out their duties and responsibilities. The
{
appointment of Non-Executive
Directors may be terminated without compensation. Non-Executive Directors are generally not expected to
{
serve for a period exceeding nine years.
For further information refer to the Nominations and Governance Committee section of the Annual Report.
Remuneration Policy (continued)
Strategic report
Governance
Financials
Other information
99
Vodafone Group Plc
Annual Report 2022
Remuneration Committee
In this section we give details of the composition of the Remuneration Committee and activities undertaken during the 2022 financial year.
The
{
Committee’s function is to exercise independent judgement and consists only of the following independent Non-Executive Directors:
Chairman:
Valerie Gooding
Committee members:
Michel Demaré and Dame Clara Furse
The Committee regularly consults with Nick Read, the Chief Executive, and Leanne Wood, the Chief Human Resources Officer, on various matters relating
to the appropriateness of awards for Executive Directors and senior executives, though they are not present when their own compensation is discussed.
In
{
addition, James Ludlow, the Group Reward and Policy Director, provides a perspective on information provided to the Committee, and requests
information and analysis from external advisers as required. Rosemary Martin, the Group General Counsel and Company Secretary, advises the
{
Committee
on corporate governance guidelines and is Secretary to the Committee.
External advisers
The Remuneration Committee seeks and considers advice from independent remuneration advisers where appropriate. The appointed advisers, WTW,
were selected following a thorough process led by the Chairman of the Remuneration Committee at the time and were appointed by the Committee
in
{
2007. The Chairman of the Remuneration Committee has direct access to the advisers as and when required, and the Committee dete
rmines the
protocols by which the advisers interact with management in support of the Committee. The advice and recommendations of the external advisers
are
{
used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisers attend Committee
meetings occasionally, as and when required by the Committee.
WTW is a member of the Remuneration Consultants’ Group and, as such, voluntarily operates under the Remuneration Consultants’ Group Code of
Conduct in relation to executive remuneration consulting in the UK. This is based upon principles of transparency, integrity, objectivity, competence, due
care and confidentiality by executive remuneration consultants. WTW has confirmed that it adheres to that Code of Conduct throughout the year for all
remuneration services provided to Vodafone and therefore the Committee is satisfied that it is independent and objective. The Remuneration Consultants’
Group Code of Conduct is available at remunerationconsultantsgroup.com.
Adviser
Appointed by
Services provided to the Committee
Fees for services provided
to
{
the Committee
£’000
1
Other services provided to the Company
WTW Remuneration
Committee
in 2007
Advice on market practice; governance;
provision of
{
market data on executive
reward; reward
{
consultancy; and
performance analysis.
£195
Reward and benefits consultancy;
provision of benchmark data; outsourced
pension administration; and insurance
consultancy services.
Note:
1.
Fees are determined on a time spent basis.
2020 Annual General Meeting – Remuneration Policy voting results
At the 2020 Annual General Meeting there was a binding vote on our Remuneration Policy. Details of the voting outcomes are prov
ided in the table
{
below.
Votes for
%
Votes against
%
Total votes
Withheld
Remuneration Policy
17,195,227,349
96.41
639,935,461
3.59
17,835,162,810
185,334,870
2021 Annual General Meeting – Remuneration Report voting results
At the 2021 Annual General Meeting there was an advisory vote on our Remuneration Report. Details of the voting outcomes are provided in the
table
{
below.
Votes for
%
Votes against
%
Total votes
Withheld
Remuneration Report
16,729,088,541
97.65
402,218,134
2.35
17,131,306,675
25,262,861
Meetings
The Remuneration Committee had five formal meetings during the year. In addition, informal conference calls can also take place. Meeting attendance
can be found on page 68. The principal agenda items at the formal meetings were as follows:
Meeting Agenda
items
May 2021
–
2021 annual bonus achievement and 2022 targets/ranges
–
2019 long-term incentive award vesting and 2022 targets/ranges
–
External market update
–
2021 Directors’ Remuneration Report
July 2021
–
2021 AGM update
–
Share plan update
November 2021
–
External market update
–
Share plan update
January 2022
–
2023 short-term incentive structure
–
Share plan update
–
External market update
–
Gender Pay Gap reporting
March 2022
–
Risk assessment of incentive plans
–
Remuneration arrangements across Vodafone
–
Committee’s terms of reference
–
Chairman and Non-Executive Director fee levels
–
2023 reward packages for the Executive Committee
–
2022 Directors’ Remuneration Report
Annual Report on Remuneration
Strategic report
Financials
Other information
100
Vodafone Group Plc
Annual Report 2022
Governance
Annual Report on Remuneration (continued)
2022 remuneration
In this section we summarise the pay packages awarded to our Executive Directors for performance in the 2022 financial year versus 2021. Specifically we
have provided a table that shows all remuneration that was earned by each individual during the year and computed a single total remuneration figure for
the year. The value of the annual bonus (‘GSTIP’) reflects what was earned in respect of the year but will be paid out in cash in the following year. Similarly
the value of the long-term incentive (‘GLTI’) reflects the share awards which will vest in June 2022 as a result of the performance through the three-year
period ended at the completion of our financial year on 31 March 2022.
Consideration of the use of discretion
The Remuneration Committee reviews all incentive awards prior to payment and uses judgement to ensure that the final assessments of performance are
fair and appropriate. If circumstances warrant it, the Committee may adjust the final payment or vesting.
The Committee reviewed incentive outcomes at the May 2022 meeting and considered the appropriateness of outcomes in light of wider financial and
business performance across the relevant measurement periods for both the short-term and long-term incentive plans. Outcomes were reviewed against
the wider employee experience during the periods under review with the Committee noting that global employee pay reviews, including the delivery of
performance-related pay, had been undertaken throughout the COVID-19 pandemic and was also scheduled for later in 2022. As such it was agreed that
the outcomes were appropriate and that no adjustments were required to either the short-term or long-term incentive outcomes this year.
2022 annual bonus (‘GSTIP’) payout (audited)
In the table below we disclose our achievement against each of the performance measures and targets in our annual bonus (‘GSTIP
’) and the resulting
total annual bonus payout level for the year ended 31 March 2022 of 69.2% of maximum. This is applied to the maximum bonus level of 200% of base
salary for each executive. Commentary on our performance against each measure is provided on the next page.
Performance measure
Payout at
maximum
performance
(% of salary)
Actual payout
(% of salary)
Actual payout
(% of overall
bonus
maximum)
Threshold
performance
level
€bn
Target
performance
level
€bn
Maximum
performance
level
€bn
Actual
performance
level
1
€bn
Service
revenue
50.0% 35.5%
17.8%
35.5
36.6
37.7
37.1
Adjusted EBIT
50.0%
34.9%
17.4%
4.3
5.1
5.8
5.4
Adjusted free cash flow
50.0%
39.9%
20.0%
4.0
4.5
5.0
4.8
Customer appreciation KPIs
50.0%
28.0%
14.0%
See overleaf for further details
Total annual bonus payout level
200.0%
138.3%
69.2%
Note:
These figures are adjusted for the impact of M&A, foreign exchange movements and any changes in accounting treatment.
Total remuneration for the 2022 financial year (audited)
Nick Read
Margherita Della Valle
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Salary/fees
1,050
1,050
700
700
Taxable benefits
1
42
32
22
21
Annual bonus: GSTIP (see below for further detail)
1,452
1,301
968
867
Total long-term incentive:
1,521
1,062
926
646
GLTI awards
2,3
1,285
888
782
540
GLTI dividends
4
236
174
144
106
Pension/cash in lieu of pension
105
105
70
70
Other
5
11
––
Total
4,171
3,551
2,686
2,304
Total Fixed Remuneration
1,198
1,188
792
791
Total Variable Remuneration
2,973
2,363
1,894
1,513
Notes:
1.
Taxable benefits include amounts in respect of: – Private healthcare (2022: Nick Read £2,189, Margherita Della Valle £2,153; 2021: Nick Read £2,683, Margherita Della Valle £2,153);
– Cash car allowance £19,200 p.a.; and
– Travel (2022: Nick Read £20,626, Margherita Della Valle £1,141; 2021: Nick Read £10,114, Margherita Della Valle £nil).
2.
The share price used for the 2021 value, as set out in note 3 below, is lower than the award grant price. As such, no amount of the value shown in the 2021 column is attributable to share price
appreciation during the performance or vesting periods. The grant price of the award which vests on 26 June 2022 was 124.24 pence whilst the value in the 2022 column is calculated using the
average closing share price over the last quarter of the 2022 financial year of 126.61 pence. Therefore the values attributable to share price appreciation in respect of the 2020 GLTI vest for Nick Read
and Margherita Della Valle are £24k and £15k respectively.
3.
The value shown in the 2021 column is the award which vested on 26 June 2021 in respect of Nick Read and Margherita Della Valle, and is valued using the execution share price on 26 June 2021
of
{
120.98 pence. The value shown in the 2022 column is the award which vests on 26 June 2022 and is valued using an average closing share price over the last quarter of the 2022 financial year of
126.61 pence.
4.
Nick Read and Margherita Della Valle receive a cash award equivalent in value to the dividends that would have been paid during the vesting period on any shares that vest. The dividend value shown
in 2022 relates to awards vesting on 26 June 2022.
5.
Reflects the value of the SAYE benefit which is calculated as £375 x 12 months x 20% to reflect the discount applied based on savings made during the year.
Strategic report
Governance
Financials
Other information
101
Vodafone Group Plc
Annual Report 2022
Financial metrics
As set out in the table above, service revenue, free cash flow and EBIT finished above the midpoints of the respective target r
anges reflecting strong
performance in markets such as South Africa, Egypt, Turkey and Portugal.
Customer appreciation KPIs
An assessment of performance under the customer appreciation KPIs measure was conducted on a market by market basis. Each market was assessed
against a number of different metrics which included:
–
Churn – defined as total gross customer disconnections in the period divided by the average total customers in the period.
–
Revenue market share – based on our total service revenue and that of our competitors in the markets we operate in.
–
Net Promoter Score (‘NPS’) for both Consumer and Vodafone Business – defined as the extent to which our customers would recommend us.
All measures utilise data from our local markets which is collected and validated for quality and consistency by independent third-party agencies where
possible. Further details on our performance against each key metric is set out below.
Despite a backdrop of regulatory changes and intense competition, the business recorded good overall churn results with a year-on-year reduction in
mobile churn reflecting strong performance in Turkey, Italy, and the UK, despite less favourable performance in Germany and Spain. Aggressive market
conditions saw more pressure on our fixed churn results, particularly in Spain and Italy, albeit with overall results remaining relatively stable and a number
of markets, including Germany and the UK delivering positive performance.
Revenue market share improved in our four largest European markets with the gap to the local leader also reducing in these markets, with the exception
of Germany where our overall position remained broadly unchanged. Elsewhere our market position remained broadly stable with a number of markets
including South Africa gaining market share and/or reducing the gap to the leader.
Consumer NPS performance during the year saw us holding market leader or co-leader positions in several markets. Particularly strong performance was
recorded in Italy as well as Portugal and Ireland with generally good performance recorded elsewhere including in the UK and Turkey which retained their
second place position. Overall consumer NPS performance was offset by slightly weaker performance in Germany and Spain.
Business NPS performance remained strong during the year and we continue to hold market leader or co-leader positions in the majority of our markets
including the UK, Italy, Spain and South Africa. In the UK we regained co-leadership position, having lost the position last year due to competitive
conditions. In Germany and Turkey, we retained second place and continue to reduce the gap to our competitors.
It is within this context that overall performance against our customer appreciation KPIs metrics during the year was judged to be above the midpoint
of
{
the target range. The aggregated performance for the Group is calculated on a revenue-weighted average to give an overall achievement. The overall
Group achievement for the year was 56.1% which reflects good consistent performance across a number of our largest markets including in particular the
UK, Italy, and South Africa.
Overall outcome
2022 annual bonus (‘GSTIP’) amounts
Base salary
£’000
Maximum bonus
% of base salary
2022 payout
% of maximum
Actual payment
£’000
Nick Read
1,050
200%
69.2%
1,452
Margherita Della Valle
700
200%
69.2%
968
Long-term incentive (‘GLTI’) award vesting in June 2022 (audited)
Vesting outcome
The 2020 long-term incentive (‘GLTI’) awards which were made to executives in June 2019 will vest at 26.1% of maximum in June
{
2022. The performance
conditions for the three-year period ending in the 2022 financial year are as follows:
Adjusted FCF performance – 2/3 of total award (€bn)
TSR outperformance – 1/3 of total award
TSR peer group
Below threshold
<15.85
Below threshold
Below median
BT Group
Orange
Threshold
15.85
Threshold
Median
Deutsche Telekom
Royal KPN
Maximum
19.55
Maximum
8.50% p.a.
Liberty Global
Telecom Italia
MTN
Telefónica
Strategic report
Financials
Other information
102
Vodafone Group Plc
Annual Report 2022
Governance
Annual Report on Remuneration (continued)
100
94
103
96
104
85
75
87
97
83
99
104
98
121
98
99
125
107
04/19
09/21
03/21
09/20
03/20
09/19
03/22
Vodafone Group
Median of peer group
Outperformance of
median 8.5% p.a.
70
80
90
100
110
120
130
140
2020 GLTI award: TSR performance
Growth in the value of a hypothetical US$100 holding
over the performance period, six month averaging
2020 GLTI share awards subject to performance conditions vesting in June 2022
Maximum
number
of shares
Adjusted free cash
flow performance
payout
% of maximum
Relative TSR
performance payout
% of maximum
Weighted
performance payout
% of maximum
Number of
shares vesting
Value of
shares vesting
(’000)
Nick Read
3,887,636
29.2%
20.0%
26.1%
1,014,672
£1,285
Margherita Della Valle
2,366,387
29.2%
20.0%
26.1%
617,627
£782
Specified procedures are performed by our internal audit team over the adjusted free cash flow to assist with the Committee’s assessment of performance.
The performance assessment in respect of the TSR measure is undertaken by WTW. Details of how the plan works can be found in th
e
{
Remuneration
Policy.
Long-term incentive (‘GLTI’) awarded during the year (audited)
The independent performance conditions for the 2022 long-term incentive awards made in August 2021, and subject to a three-year performance
period
{
ending 31 March 2024, are adjusted free cash flow (60% of total award), relative TSR (30% of total award) and ESG (10% of total
award)
performance as follows:
Adjusted FCF performance
(60% of total award)
Adjusted FCF performance
(€bn)
Vesting percentage
(% of FCF element)
Below threshold
<15.0
0%
Threshold
15.0
20%
Maximum
17.0
100%
TSR performance
(30% of total award)
TSR outperformance
Vesting percentage
(% of TSR element)
Below threshold
Below median
0%
Threshold
Median
20%
Maximum
8.50% p.a.
100%
TSR peer group
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
Telefónica Deutschland
The adjusted free cash flow for the three-year period ended on
31
{
March
{
2022 was €16.8 billion and equates to vesting under
the
{
FCF
{
element of 29.2% of maximum.
The chart to the right shows that our TSR performance over
the
{
three-year period ended on 31 March 2022 was above the
median
{
of
{
our comparator group and equates to vesting under
the
{
TSR
{
element of 20%
{
of maximum.
When the weighting of each condition is applied to the respective
performance outcomes, this results in a calculated payout of 26.1%
of
{
overall maximum.
The vesting impact of this outcome when applied to the number
of
{
shares
{
granted is set out in the table below.
Strategic report
Governance
Financials
Other information
103
Vodafone Group Plc
Annual Report 2022
Purpose pillar
ESG metric for 2022 GLTI
Overall ambition
Baseline position for 2022 GLTI
Ambition for 2022 GLTI (10% of total award
Planet
Greenhouse gas reduction
50% reduction from FY17
baseline by 2025
37% reduction from FY17
baseline at 31 March 2021
60% reduction from FY17
baseline by 31 March 2024
Inclusion for All
Women in management
40% representation of
women in management
by
{
2030
32% representation of
women in management
at
{
31 March 2021
35% representation of
women in management
by
{
31 March 2024
Digital Society /
Inclusion for All
M-Pesa connections
Connect >50m people
and
{
their families to
mobile
{
money by 2025
48.3m connections
at 31 March 2021
68.2m connections
by 31 March 2024
The table below sets out the conditional awards of shares made to the Executive Directors in August 2021.
2022 GLTI performance share awards made in August 2021
1
Maximum
vesting level
(number of shares)
Maximum
vesting level
(face value
2
)
Proportion of
maximum award vesting at
minimum performance
Performance
period end
Nick Read
4,494,863
£5,250,000
1/5th
31 Mar 2024
Margherita Della Valle
2,696,917
£3,149,999
1/5th
31 Mar 2024
Notes:
1.
GLTI awards were granted as conditional share awards over shares with a value equal to the percentages of salary referred to on page 92. Dividend equivalents on the shares that vest are paid in cash after
the vesting date.
2.
Face value calculated based on the closing share price on 2 August 2021 (day immediately preceding the date of grant) of 116
.8 pence.
Outstanding awards
The structure for awards made in November 2020 (vesting August 2023) and August 2021 (vesting August 2024) is set out on the pr
evious page.
Further
{
details on the structure of these awards, and relevant targets, can be found in the Annual Report on Remuneration of the releva
nt year.
All-employee share plans
During the year the Executive Directors were eligible to participate in the Vodafone Group Sharesave Plan which is open to all UK employees.
The Vodafone Sharesave Plan is an HM Revenue & Customs (‘HMRC’) approved scheme open to all staff permanently employed by a Vodafone company
in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive Directors’ participation is included
in the option table on page 105.
Pensions (audited)
During the 2022 financial year Nick Read received a cash allowance of 10% of base salary. Margherita Della Valle accrued benefits under the defined
contribution pension plan of £3,999.96, with the remainder of her 10% of base salary pension benefit for the year delivered as a cash allowance.
Nick Read is a deferred member of the Vodafone Group Pension Scheme which closed to future accrual in 2010 before he was an Executive Director.
Margherita Della Valle has not participated in a Vodafone sponsored defined benefit scheme during her employment.
The Executive Directors are provided benefits in the event of death in service. In the event of ill health, an entitlement to b
enefit of 2/3 of base salary,
up
{
to
{
a maximum benefit determined by the insurer, may be provided up until State Pension Age. In respect of the Executive Committee members,
the
{
Group has made aggregate contributions of £143,175 (2021: £194,955) into defined contribution pension schemes.
Alignment to shareholder interests (audited)
Current levels of ownership by the Executive Directors, and the date by which the goal should be or should have been achieved, are shown below.
Based on a share price of 126.61 pence, Nick Read is currently above, and Margherita Della Valle currently below, the respectiv
e shareholding
requirement. As shown in the charts below, both Executive Directors increased their shareholding levels during the year. Margherita Della Valle
joined
{
the
{
Board on 27 July 2018 and is expected to achieve her goal following the aforementioned vest of the 2020 GLTI.
At 31 March 2022
Requirement
as a % of salary
Current %
of salary held
% of requirement
achieved
Number of
shares owned
Value of
shareholding
Date for requirement
to be achieved
Nick Read
500%
555%
111%
4,604,134
£5.8m
July 2023
Margherita Della Valle
400%
328%
82%
1,814,284
£2.3m
July 2023
4.6m
4.6m
4.4m
4.4m
500%
500%
555%
555%
545%
545%
444%
444%
666%
666%
4%
increase
31/03
2022
31/03
2021
Goal
Actual
31/03
2022
Illustrative
20% SP
increase
Illustrative
20% SP
decrease
Actual
31/03
2021
Goal Deadline:
July 2023
Nick Read
Actual holding
(number of shares)
Holding scenario
(% of salary)
22%
increase
Margherita Della Valle
Actual holding
(number of shares)
Goal Deadline:
July 2023
Holding scenario
(% of salary)
31/03
2022
31/03
2021
Goal
Actual
31/03
2022
Illustrative
20% SP
increase
Illustrative
20% SP
decrease
Actual
31/03
2021
1.8m
1.5m
400%
328%
275%
262%
262%
394%
394%
Strategic report
Financials
Other information
104
Vodafone Group Plc
Annual Report 2022
Governance
Annual Report on Remuneration (continued)
The shareholding requirements include a post employment condition whereby the Executive Directors will need to continue to hold shares equivalent to
the value of their requirement at the date of departure (or actual holding on departure if the requirement has not been reached during employment) for
a
{
further two years post employment. The Committee has a number of processes in place to ensure this condition is met, including executives agreeing
to
{
these terms prior to receiving an award, executives holding the majority of their shares (and at least up to the value of their
requirement) in
{
a Company
accessible account, and the Committee having the ability to lapse any unvested GLTI awards if the condition is not met.
Collectively the Executive Committee including the Executive Directors
{
owned 27,921,648 Vodafone shares at 31 March 2022, with a value of over
£35.3
{
million. None of the Executive Committee members’ shareholdings amounts to more than 1% of the issued shares in that class of share, excluding
treasury shares.
Directors’ interests in the shares of the Company (audited)
A summary of interests in shares and scheme interests of the Directors who served during the year is given below. More details of the outstanding shares
subject to award and options are set out in the table below and on page 105.
Share options
At 31 March 2022
Total number
of interests in shares
(at maximum)
1
Unvested with
performance conditions
(at target)
Unvested with
performance conditions
(at maximum)
SAYE
(unvested without
performance conditions)
Executive Directors
Nick Read
17,203,287
6,773,988
12,585,861
13,292
Margherita Della Valle
9,399,605
4,077,914
7,585,321
–
Total
26,602,892
10,851,902
20,171,182
13,292
Note:
1.
This includes both owned shares and the maximum number of unvested share awards.
The total number of interests in shares includes interests of connected persons, unvested share awards and share options.
At 31 March 2022
Total number of interests in shares
Non-Executive Directors
Sanjiv Ahuja (position at retirement)
14,000 (ADRs)
1
Sir Crispin Davis
34,500
Michel Demaré
100,000
Dame Clara Furse
150,000
Valerie Gooding
28,970
Renee James (position at retirement)
27,272
Deborah Kerr (appointed 1 March 2022)
12,000 (ADRs)
1
Maria Amparo Moraleda Martinez
30,000
David Nish
107,018
Olaf Swantee (position at retirement)
220,000
Jean-François van Boxmeer
323,380
Note:
1.
One ADR is equivalent to 10 ordinary shares.
At 17 May 2022, and during the period from 1 April 2022 to 17 May 2022, no Director had any interest in the shares of any subsidiary company. Other
than those individuals included in the tables above who were Board members at 31 March 2022, members of the Group’s Executive C
ommittee at
31
{
March 2022 had an aggregate beneficial interest in 21,503,230 ordinary shares of the Company. At 17 May 2022, the Directors had an aggregate
beneficial interest in 7,312,286 ordinary shares of the Company and the Executive Committee members had an aggregate beneficial interest in
21,503,230 ordinary shares of the Company. None of the Directors or the Executive Committee members had an individual beneficial interest
amounting
{
to greater than 1% of the Company’s ordinary shares.
Performance share awards
The maximum number of shares subject to outstanding awards that have been granted to Directors under the long-term incentive (‘GLTI’) plan are
currently as follows:
GLTI performance share awards
2020 award
Awarded: June 2019
Performance period ending: March 2022
Vesting date: June 2022
Share price at grant: 124.2 pence
2021 award
Awarded: November 2020
Performance period ending: March 2023
Vesting date: August 2023
Share price at grant: 124.9 pence
2022 award
Awarded: August 2021
Performance period ending: March 2024
Vesting date: August 2024
Share price at grant: 116.8 pence
Nick Read
3,887,636
4,203,362
4,494,863
Margherita Della Valle
2,366,387
2,522,017
2,696,917
Details of the performance conditions for the awards can be found on pages 101 to 103 or in the Remuneration Report from the relevant year.
Strategic report
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105
Vodafone Group Plc
Annual Report 2022
Share options
The following information summarises the Executive Directors’ options under the HMRC approved Vodafone Group 2008 Sharesave Plan (‘SAYE’).
No
{
other Directors have options under any schemes and, other than under the SAYE, no options have been granted since 2007. Options under the
SAYE
{
were granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount.
Grant date
At
1 April 2021
or date of
appointment
Options
granted
during the
2022 financial
year
Options
exercised
during the
2022 financial
year
Options
lapsed
during the
2022 financial
year
Options
held at
31 March 2022
Option
price
Date from
which
exercisable
Expiry date
Market
price on
exercise
Gain on
exercise
Number
of shares
Number
of shares
Number
of shares
Number
of shares
Number
of shares
Pence
1
Pence
Nick Read
SAYE
2 Mar 17
4,854
–
–
–
4,854
154.51
1 Apr 22
1 Oct 22
–
–
SAYE
14 Jul 17
8,438
–
–
–
8,438
177.75
1
Sep 22
1
Mar 23
–
–
Total
13,292
–
–
–
13,292
–
–
Note:
1.
The closing trade share price on 31 March 2022 was 124.84 pence. The highest trade share price during the year was 142.42 pence and the lowest price was 106.94 pence.
At 17 May 2022 there had been no change to the Directors’ interests in share options from 31 March 2022. Other than the individual included
in
{
the
{
table
{
above, at 17 May 2022 members of the Group’s Executive Committee held options for 25,241 ordinary shares at prices ranging from
102.6
{
pence to
{
111.7 pence per ordinary share, with a weighted average exercise price of 107.0 pence per ordinary share exercisable at dates
ranging
{
from 1
{
September 2022 to 1 September 2023.
Margherita Della Valle, Hannes Ametsreiter, Aldo Bisio, Colman Deegan, Ahmed Essam, Alexandre Froment-Curtil, Shameel Joosub, V
inod Kumar,
Rosemary Martin, Serpil Timuray, and Johan Wibergh held no options at 17 May 2022.
Loss of office payments (audited)
Other than amounts already disclosed in prior year reports, no loss of office payments were made during the year.
Payments to past Directors (audited)
During the 2022 financial year Lord MacLaurin received benefit payments in respect of security costs as per his contractual arrangements. These costs
exceeded our de minimis threshold of £5,000 p.a. and, including the tax paid, were £23,679 (2021: £23,513).
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees.
During the year ended 31 March 2022, Nick Read served as a non-executive director on the board of Booking Holdings Inc. where h
e retained fees
of
{
US$462,571 (2021: US$277,389). Margherita Della Valle served as a non-executive director on the board of Reckitt Benckiser Grou
p plc where she
retained fees of £115,563 (2021: £112,000).
2022 remuneration for the Chairman and Non-Executive Directors (audited)
Salary/fees
Benefits
1
Total
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Chairman
Jean-François van Boxmeer
650
297
18
–
668
297
Senior Independent Director
Valerie Gooding
165
165
9
–
174
165
Non-Executive Directors
Sir Crispin Davis
115
115
9
1
124
116
Michel Demaré
115
115
1
–
116
115
Dame Clara Furse
115
115
3
–
118
115
Deborah Kerr (appointed 1 March 2022)
10
–
1
–
11
–
Maria Amparo Moraleda Martinez
137
115
1
–
138
115
David Nish
140
140
10
1
150
141
Former Non-Executive Directors
Sanjiv Ahuja (stepped down 27 July 2021)
38
115
–
1
38
116
Renee James (stepped down 27 July 2021)
38
115
3
–
41
115
Olaf Swantee (stepped down 25 September 2021)
21
–
–
–
21
–
Total
1,544
1,292
55
3
1,599
1,295
Note:
1.
We have been advised that for Non-Executive Directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit. The table above includes
these travel expenses and the corresponding tax contribution.
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106
Vodafone Group Plc
Annual Report 2022
Governance
Annual Report on Remuneration (continued)
Pay in the wider context
Fair pay at Vodafone
As part of its review of executive remuneration arrangements, the Committee takes account of the pay policies in place across the wider business. This
includes considering the structure of remuneration offerings at each level of the business to ensure there is a strong rationale for how packages evolve
across the different levels of the organisation.
During the year the Committee reviewed the remuneration structure across the business, which included how our arrangements aligned with our strategy,
supported our purpose, and celebrated the Spirit of Vodafone. The update also set out the results of the latest annual fair pay review, including where
the
{
key focus areas were and what actions had been agreed locally to implement any required adjustments. In addition to being a cor
e principle of the
Committee, there
{
is a clear culture in our business of ensuring we offer competitive and fair pay to all employees. Our approach across our business is
guided by the six principles set out below. Our commitment to these principles is reflected in how the UK based Living Wage Foundation has certified us
as
{
an Accredited Living Wage employer.
1. Market competitive
The pay of our people is reflective of their skills, role and function and the external market.
We annually review the pay of each employee and actively manage any who fall below the market competitive range.
2. Free from discrimination
Our pay should not be affected by gender, age, disability, gender identity and expression, sexual orientation, race, ethnicity, cultural heritage or belief.
We annually compare the average position of our men and women against their market benchmark, grade and function to identify and understand any
differences, and take action if necessary.
3. Ensure a good standard of living
We work with the independent organisation, the Fair Wage Network, to assess how our pay compares to the ‘living wage’ in each o
f our markets because
we are committed to providing a good standard of living for our people and their families.
4. Share in our successes
All our people should have the opportunity to share in our success by being eligible to receive some form of performance related pay, e.g. a bonus, shares
or sales incentive.
5. Provide benefits for all
Our global standard is to offer all our people life insurance, parental leave and access to either Company or state provided healthcare and pension
{
provision.
6. Open and transparent
We ensure that our people understand their pay. We do this through a series of user-friendly guides, webpages and an annual reward statement,
which
{
help explain our people’s pay and outline the value of their core reward package.
In addition, they also receive monthly or weekly payslips and a payment schedule.
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
Stakeholder engagement
The Committee considers all stakeholder groups when setting executive pay including:
Colleagues
The Committee is fully briefed on pay arrangements across the business to ensure any decisions on executive pay are made within our wider business
context and take into account wider employee pay conditions. We engage with our employees through a variety of means including employee forums,
interactive webinars (including with our executives), global Spirit Beat surveys and digital platforms – all of which give our people the chance to voice their
opinion on any area of interest – including all-employee and executive pay.
Shareholders
The Committee values the active participation of our shareholders during our consultations and fully considers all feedback as part of the review process.
Government
The Committee actively engages with external professional bodies and government departments when they issue consultations on proposed changes to
legislation or reporting guidelines.
Wider society
The Committee is fully aware that society remains concerned about the risk of excessive executive pay practices in the wider market. The Committee
believes that transparent reporting and active engagement in explaining both the operation of, and rationale for, executive pay decisions is key for
businesses to retain trust in this area.
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Vodafone Group Plc
Annual Report 2022
UK Gender Pay Gap reporting
Each year we publish our UK Gender Pay Gap in line with the statutory UK methodology. The nature of the statutory calculation means the gap will
fluctuate year on year, influenced by changes in our business structure, Company performance and the percentage of men and women at all levels and
positions. The existence of a UK gender pay gap in our business is primarily a consequence of more men than women holding senior or specialist, and
therefore higher-paid, roles.
With our commitment to embed an inclusive culture, we continue our work to reduce the gap and have made good progress since the publication of
the
{
first report in 2017. Our global programmes aim to support women across different roles, areas, and geographies of our business
and will, over time,
reduce our specific UK Gender Pay Gap which this year was calculated as 9.6% – a decrease from our 2020 figure of 12.0%.
We have made significant progress over the last five years with the 2022 Bloomberg Gender-Equality Index recognising Vodafone a
s one of the top
companies globally in leading the way towards more equal, inclusive workplaces. We are proud of the progress we are making but recognise there is
more
{
to be done.
Click to learn more about our initiatives, case studies, and key statistics on our dedicated UK Gender Pay Gap webpage at
vodafone.com/uk-gender-pay-gap
Relative spend on pay
The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group.
5,157
5,157
5,334
5,334
2,412
2,412
2,483
2,483
Distributed by way
of dividends
Overall expenditure on
remuneration for all employees
2021
2022
2021
2022
€m
Read more details on dividends and expenditure on remuneration for all employees,
on pages 160 and 194 respectively
CEO pay ratio
The following table sets out our CEO pay ratio figures:
Year
CEO single figure
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2022
£4,171k
Option B
113:1
73:1
48:1
2021
£3,551k
Option B
106:1
87:1
42:1
2020
£3,529k
Option B
113.1
69.1
45.1
2019
1
£4,359k
Option B
154:1
107:1
56:1
Note:
1.
The CEO single figure used in the calculation of the 2019 ratios reflects a blended figure for Vittorio Colao and Nick Read, recognising the change in incumbency for the role during this year.
The pay ratio figures in the above table are calculated using the following total pay and benefits information:
Year
Supporting information
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2022
Salary £31.7k
£47.1k £71.5k
Total pay and benefits
£36.9k
£57.5k
£87.2k
2021
Salary
£30.0k
£37.1k
£71.2k
Total pay and benefits
£33.5k
£41.0k
£85.3k
2020
Salary
£28.0k
£42.8k
£65.0k
Total pay and benefits
£31.3k
£51.1k
£78.6k
2019
Salary
£23.1k
£36.4k
£65.0k
Total pay and benefits
£28.3k
£40.8k
£78.2k
The calculation methodology used reflects Option B as defined under the relevant regulations. In line with the relevant regulations this utilises the most
recently collected and disclosed data analysed within our Gender Pay Gap report, with employees at the three quartiles identified from this analysis and
their respective single figure values calculated.
To ensure this data accurately reflects individuals at such quartiles, the single figure values for individuals immediately above and below the identified
employee at each quartile within the Gender Pay Gap analysis were also reviewed.
In recent years our ratios have remained relatively consistent, reflecting how the single figures for both the Chief Executive and employees at the quartile
positions have remained stable when viewed over the period set out in the table above. In general we expect the ratios to be primarily driven by the
valuation of the long-term incentive that is included in the Chief Executive’s single figure for the year.
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Governance
Annual Report on Remuneration (continued)
Change in remuneration for Directors and all employees
In line with regulatory requirements, the table below calculates the percentage change in Directors’ remuneration (salary, taxable benefits and annual
bonus payment) compared to the average remuneration for other Vodafone Group employees who are measured on comparable business objectives
and
{
who have been employed in the UK since 2020 (2020 to 2021) and 2021 (2021 to 2022) (per capita). Vodafone has employees based a
ll around
the
{
world and some of these individuals work in countries with very high inflation; therefore Vodafone’s UK-based Group employees i
s deemed the most
appropriate employee group for this comparison.
Percentage change from 2021 to 2022
Percentage change from 2020 to 2021
Base Salary
Taxable benefits
Annual bonus
Base Salary
Taxable benefits
Annual bonus
Executive Directors
Nick Read
0.0%
31.3%
11.6%
0.0%
-23.8%
19.4%
Margherita Della Valle
0.0%
4.8%
11.6%
0.0%
-4.5%
19.3%
Non-Executive Directors
Jean-François van Boxmeer
118.9%
–
–
–
–
–
Valerie Gooding
0.0%
–
–
0.0%
-100.0%
–
Sir Crispin Davis
0.0%
800.0%
–
0.0%
-95.7%
–
Michel Demaré
0.0%
–
–
0.0%
-100.0%
–
Dame Clara Furse
0.0%
–
–
0.0%
-100.0%
–
Deborah Kerr (appointed 1 March 2022)
–
–
–
–
–
–
Maria Amparo Moraleda Martinez
19.10%
–
–
0%
-100.0%
–
David Nish
0.0%
900.0%
–
0.00%
-96.8%
–
Former Non-Executive Directors
Sanjiv Ahuja (stepped down 27 July 2021)
-67.0%
-100.0%
–
0.0%
-66.7%
–
Renee James (stepped down 3 November 2020)
-67.0%
–
–
-13.5%
-100.0%
–
Olaf Swantee (stepped down 25 September 2021)
–
–
–
–
–
–
Other Vodafone Group employees employed in the UK
2.5%
0.3%
80.0%
3.8%
0.2%
30.2%
The significant year-on-year increase in fees paid to Jean-François van Boxmeer reflects how the individual was appointed on 28 July 2020 and therefore
the 2021 fees figure used for the purpose of this calculation does not reflect a full year value. The percentage increase does not reflect an actual increase
in the fee payable to the Chairman which has remained unchanged since April 2018. Read more on pages 105 and 112.
Similarly, whilst some of the percentages within the ‘Taxable benefits’ column look significant, these actually reflect relatively small increases in value when
viewed on an absolute basis. The percentages also reflect how certain travel and accommodation expenses in relation to attending Board meetings were
lower than normal in 2021 due to the impact of COVID-19 on the ability to attend meetings in-person. Where an individual had no taxable benefit values
in
{
2021 it has not been possible to calculate a percentage for the table above. Further details on the actual values can be found
on page 105.
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Vodafone Group Plc
Annual Report 2022
Assessing pay and performance
In the table below we summarise the Chief Executive’s single figure remuneration over the past 10 years, as well as how our variable pay plans have
paid
{
out in relation to the maximum opportunity. This can be compared with the historic TSR performance over the same period. The ch
art below
shows
{
the performance of the Company relative to the STOXX Europe 600 Index over a 10-year period. The STOXX Europe 600 Index was sel
ected
as
{
this
{
is a
{
broad-based index that includes many of our closest competitors. It should be noted that the TSR element of the 2020 GLTI is based on
the
{
TSR
{
performance shown in the chart on page 102 and not this chart.
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
10-year historical TSR performance
Growth in the value of a hypothetical
€100
{
holding over 10 years
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Financial year remuneration
for Chief Executive
Single figure of total remuneration £’000
11,099
8,014
2,810
5,224
6,332
7,389
2,740
1
/1619
2
3,529
3,551
4,171
Annual bonus
(actual award versus max opportunity)
33%
44%
56%
58%
47%
64%
44%
52%
62%
69%
Long-term incentive
(vesting versus max opportunity)
57%
37%
0%
23%
44%
67%
40%
50%
22%
26%
Notes:
1.
Reflects the single figure in respect of Vittorio Colao for the period to 30 September 2018.
2.
Reflects the single figure in respect of Nick Read for the period from 1 October 2018.
90
110
130
150
170
190
210
230
250
Vodafone Group
STOXX Europe
600 index
160
220
240
100
116
141
169
163
113
137
168
147
150
145
114
95
123
124
172
173
183
0
10
20
30
40
50
60
70
80
90
100
L
TI
average 37%
Annual Bonus
average 53%
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Other information
110
Vodafone Group Plc
Annual Report 2022
Governance
Annual Report on Remuneration (continued)
2023 remuneration
Details of how the Remuneration Policy will be implemented for the 2023 financial year are set out below.
Prior to reviewing executive remuneration arrangements the Committee was fully briefed on remuneration arrangements elsewhere in the business.
This
{
included a detailed discussion on the structure of remuneration offerings at each level of the business, how pay at these levels is determined,
and
{
the
{
findings of the latest annual Fair Pay review. The Committee also considered the external context and decisions made in relation to our wider
employee population.
The cumulative effect of these discussions was that the Committee was able to make decisions in respect of executive remuneration within the context
of
{
the wider employee pay landscape within the business.
21
2023 Base salaries
Neither the Chief Executive nor the Chief Financial Officer has received a salary increase since their appointment to their current roles in 2018. During the
March 2021 review, and as set out in the 2021 Directors’ Remuneration Report, the Committee agreed that increases for the Executive Directors were
warranted, but determined to keep both salaries unchanged given the context of COVID-19 and the budgetary restraint being shown for the wider
leadership team at the time. The Committee agreed it would review this position again in 2022.
As part of this year’s review, conducted in March 2022, the Committee reviewed executive remuneration arrangements against the following
comparator
{
groups:
1.
A EuroTop peer group constituting the top 25-75 European companies (excluding financial services companies) and a few other select companies
relevant to the telco sector; and
2.
The FTSE 30 (excluding financial services companies).
Following the 2022 review the Committee concluded that in light of their experience it was appropriate to increase the salaries of both Executive Directors.
It was further agreed that despite the rationale for more significant adjustments, it was appropriate for the increases to be aligned with the wider UK workforce
budget. The salaries for both Executive Directors will therefore be increased by 3% effective from 1 July 2022 to the following levels:
–
Chief Executive: Nick Read £1,081,500; and
–
Chief Financial Officer: Margherita Della Valle £721,000.
Pension
Pension arrangements for both the Chief Executive and the Chief Financial Officer will remain unchanged at 10% of salary, in line with the maximum
employer contribution level for the wider UK population.
2023 Annual Bonus (
ȁ
GSTIP’)
Following its annual review of the GSTIP structure, the Committee agreed that the performance measures and associated weightings for the 2023 plan
should remain unchanged from 2022 as follows:
–
Service revenue (25%);
–
Adjusted EBIT (25%);
–
Adjusted free cash flow (25%); and
–
Customer appreciation KPIs (25%). This includes an assessment of churn, revenue market share and Net Promoter Score
1
(‘NPS’).
Note:
1.
The assessment of NPS utilises data collected in our local markets which is validated for quality and consistency by independent third party agencies.
Due to the potential impact on our commercial interests, annual bonus targets are considered commercially sensitive and therefore will be disclosed
in
{
the 2023 Remuneration Report following the completion of the financial year.
Long-term incentive (
ȁ
GLTI’) awards for 2023
Awards for 2023 will be made in line with the arrangements described in our policy on pages 95 and 96. Vesting of the 2023 award will be subject
to
{
adjusted free cash flow (60% of total award), relative TSR (30% of total award), and ESG (10% of total award) performance. Perf
ormance will be
measured over the three financial years ending 31 March 2025, and any net vested shares will be subject to an additional two-year holding period
(i.e.
{
the
{
‘3+2’ model). It is anticipated that the final awards will be reviewed by the Committee at the July 2022 meeting and, subject to the Committee’s
approval, will be granted shortly afterwards.
Further details of the 2023 award targets are provided are on the following page.
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Vodafone Group Plc
Annual Report 2022
Adjusted free cash flow (60% of total award)
Reflecting internal timings on budget finalisation and the grant date, the Committee intends to approve the target range for the three year adjusted
free
{
cash flow target at its July 2022 meeting. Details of the final range will be disclosed in the relevant market announcement at
the time of grant and
published in the 2023 Directors’ Remuneration Report.
Relative TSR (30% of total award)
Following the annual review of the performance measures which included a review of analysis provided by the Committee’s external advisers,
the
{
Committee determined that the TSR outperformance range for the 2023 award should be set at 8.50% p.a. at maximum.
The Committee further determined that the TSR peer group should remain unchanged for the 2023 award. Further details are set out in the tables
{
below.
Relative TSR (30% of total award)
TSR outperformance
Vesting (% of relative TSR element)
Below threshold
Below median
0.0%
Threshold
Median
20.0%
Maximum
8.50% p.a.
100.0%
TSR peer group
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
Telefónica Deutschland
Linear interpolation (i.e. straight-line vesting) occurs for performance between threshold and maximum.
ESG (10% of total award)
The table below sets out how performance under the ESG measure for the 2023 award will be assessed against three quantitative a
mbitions:
Purpose pillar
Metric for 2023 GLTI
Overall ambition
Baseline position for 2023 GLTI
Ambition for 2023 GLTI (10% of total award)
Planet
Net zero
Net zero under Scope 1 & 2
by
{
2030
1
46% reduction in Scope 1 & 2
emissions versus a FY20 baseline
at 31 March 2022
80% reduction in Scope 1 & 2
emissions versus a FY20 baseline
by 31 March 2025
Inclusion for All
Female representation
in
{
management
40% representation of women
in
{
management by 2030
32% representation of women in
management at 31 March 2022
35% representation of women in
management by 31 March 2025
Digital Society /
Inclusion for All
Financial inclusion
customers
>75m financial inclusion
customers by 2026
54.5m financial inclusion
customers at 31 March 2022
70.0m financial inclusion
customers by 31 March 2025
Note:
1.
This carbon reduction ambition has been approved by the Science Based Targets initiative.
Each ambition for the 2023 award has been set by considering both our externally communicated targets and our internal progress as at 31 March 2022.
At the end of the performance period the Committee will assess achievement across the three metrics against the stated ambitions and determine vesting
under this element. Full disclosure of the rationale for the final vesting decision will be provided in the relevant Directors’ Remuneration Report.
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Governance
2023 remuneration for the Chairman and Non-Executive Directors
During the year, and following its establishment via Board approval in May 2021, it was agreed that the Chair of the newly formed ESG Committee would
receive an additional fee in line with those payable for other Committee Chairmanships.
Fees for our Chairman and Non-Executive Directors have been benchmarked against the FTSE 30 (excluding financial services companies). Following
{
this
year’s review it was agreed that no changes will be made to the current fee levels, which are set out in the table below.
Position/role
Fee payable
£’000
Chairman
1
650
Non-Executive Director
115
Additional combined fee for Senior Independent Director and Chairman of the Remuneration Committee
50
Additional fee for Chairmanship of Audit and Risk Committee
25
Additional fee for Chairmanship of ESG Committee
25
Note:
1.
The Chairman’s fee also includes the fee for the Chairmanship of the Nominations and Governance Committee.
Further remuneration information
Dilution
All awards are made under plans that incorporate dilution limits as set out in the guidelines for share incentive schemes published by the
Investment
{
Association. The current estimated dilution from subsisting executive awards is approximately 2.7% of the Company’s share capital at
31
{
March 2022 (2.6% at 31 March 2021), whilst from all-employee share awards it is approximately 0.3%
{
(0.3%
{
at 31 March 2021). This gives a total
dilution of 3.0% (2.9%
{
at 31 March 2021).
Service contracts
The terms and conditions of appointment of our Directors are available for inspection at the Company’s registered office during normal business hours
and
{
at the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting). The Executive Directors have notice
periods in their
service contracts of 12 months. The Non-Executive Directors’ letters of appointment do not contain provision for notice periods or for compensation if
their appointments are terminated.
This report on remuneration has been approved by the Board of Directors and signed on its behalf by:
Valerie Gooding
Chairman of the Remuneration Committee
17 May 2022
Valerie Gooding
Annual Report on Remuneration (continued)
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Vodafone Group Plc
Annual Report 2022
Our US listing requirements
As Vodafone’s American depositary shares are listed on NASDAQ Stock Market LLC (‘NASDAQ’), we are required to disclose a summary of any material
differences between the corporate governance practices we follow and those of US companies listed on NASDAQ. Vodafone’s corporate governance
practices are primarily based on UK requirements but substantially conform to those required of US companies listed on NASDAQ.
The material differences are set out in the following table:
Board member independence
Different tests of independence for Board members are applied under the 2018 UK Corporate
Governance Code (the ‘Code’) and the NASDAQ listing rules. The Board is not required to take
into
{
consideration NASDAQ’s detailed definitions of independence as set out in the NASDAQ listing
rules. The Board has carried out an assessment based on the independence requirements of the
Code and has determined that, in its judgement, each of Vodafone’s Non-Executive Directors is
independent within the meaning of those requirements.
Committees
The NASDAQ listing rules require US companies to have a nominations committee, an audit
committee and a compensation committee, each composed entirely of independent directors, with
the nominations committee and the audit committee each required to have a written charter which
addresses the committee’s purpose and responsibilities, and the compensation committee having
sole authority and adequate funding to engage compensation consultants, independent legal
counsel and other compensation advisers.
–
Our Nominations and Governance Committee is chaired by the Chairman of the Board and its
other members are independent Non-Executive Directors.
–
Our Remuneration Committee is composed entirely of independent Non-Executive Directors.
–
Our Audit and Risk Committee is composed entirely of Non-Executive Directors, each
of
{
whom
{
(i)
{
the Board has determined to be independent based on the independence
requirements of the Code and (ii) meets the independence requirements of the Securities
Exchange Act of 1934.
–
We have terms of reference for our Nominations and Governance Committee, Audit and Risk
Committee and Remuneration Committee, each of which comply with the requirements of the
Code and are available for inspection on our website at vodafone.com/governance
–
These terms of reference are generally responsive to the relevant NASDAQ listing rules, but may
not address all aspects of these rules.
Code of Ethics and Code of Conduct
Under the NASDAQ listing rules, US companies must adopt a Code of Conduct applicable to all
directors, officers and employees that complies with the definition of a ‘Code of Ethics’ set out in
section 406 of the Sarbanes-Oxley Act.
–
We have adopted a Code of Ethics that complies with section 406 of the Sarbanes-Oxley Act
which is applicable only to the senior financial and principal executive officers.
Click to read our Code of Ethics
vodafone.com/governance
–
We have also adopted a separate Code of Conduct which applies to all employees.
Quorum
The quorum required for shareholder meetings, in accordance with our Articles of Association, is
two shareholders, regardless of the level of their aggregate share ownership, while US companies
listed on NASDAQ are required by the NASDAQ listing rules to have a minimum quorum of 33.33%
of the shareholders of ordinary shares for shareholder meetings.
Related party transactions
In lieu of obtaining an independent review of related party transactions for conflicts of interests
in
{
accordance with the NASDAQ listing rules, we seek shareholder approval for related party
transactions that (i) meet certain financial thresholds or (ii) have unusual features in accordance
with the Listing Rules issued by the Financial Conduct Authority (FCA) in the UK (the ‘Listing Rules’),
the Companies Act 2006 and our Articles of Association.
Further, we use the definition of a transaction with a related party as set out in the Listing Rules,
which differs in certain respects from the definition of related party transaction in the NASDAQ
listing rules.
Shareholder approval
When determining whether shareholder approval is required for a proposed transaction, we comply
with both the NASDAQ listing rules and the Listing Rules. Under the NASDAQ listing rules, whether
shareholder approval is required for a transaction depends on, among other things, the percentage
of shares to be issued or sold in connection with the transaction. Under the Listing Rules, whether
shareholder approval is required for a transaction depends on, among other things, whether the
size of a transaction exceeds a certain percentage of the size of the listed company undertaking
the
{
transaction.
Strategic report
Financials
Other information
114
Vodafone Group Plc
Annual Report 2022
Governance
The Directors of the Company present their report
together with the
b
audited consolidated financial
statements for the year ended 31
b
March
b
2022.
This report has been prepared in accordance with requirements outlined
within The Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 and forms part of the management report
as required under Disclosure Guidance and Transparency Rule (‘DTR’) 4.
Certain information that fulfils the requirements of the Directors’ report
can be found elsewhere in this document and is referred to below. This
information is incorporated into this Directors’ report by reference.
Vodafone Group plc is incorporated and domiciled in England and
Wales
{
(registration number 1833679). The registered address of the
Company is Vodafone House, The Connection, Newbury, Berkshire,
RG14
{
2FN, England.
Responsibility statement
As required under the DTRs, a statement made by the Board regarding
the preparation of the financial statements is set out on pages 117-118
which also provides details regarding the disclosure of information to the
Company’s auditor and management’s report on internal control over
financial information.
Going concern
The going concern statement required by the Listing Rules and
the
{
UK
{
Corporate Governance Code (the ‘Code’) is set out in the
“Directors’ statement of responsibility” on page 118.
System of risk management and internal control
The Board is responsible for maintaining a risk management and internal
control system and for managing principal risks faced by the Group. Such
a system is designed to manage rather than eliminate business risks and
can only provide reasonable and not absolute assurance against material
mistreatment or loss. This is described in more detail in the Audit and Risk
Committee Report on pages 83-88.
The Board has implemented in full the FRC ‘Guidance on Risk
Management, Internal Control and related Financial and Business
Reporting’ for the year and to the date of this Annual Report. The
resulting
{
procedures, which are subject to regular monitoring and review,
provide an ongoing process for identifying, evaluating and managing the
Company’s principal risks (which can be found on pages 59-65).
Corporate Governance Statement
The Corporate Governance Statement setting out how the Company
complies with the Code is set out on page 71. This includes a description of
the main features of our internal control and risk management arrangements
in
{
relation to the financial reporting process. The in
f
ormation required by
DTR 7.2.6R can be found in the “Shareholder information” section on
pages 234-239. A description of the composition and operation of the
Board and its Committees including the
{
Board Diversity Policy is set out
on page 75, pages 80-90 and page
{
99. The Code can be viewed in
{
full
at
{
frc.org.uk.
Strategic Report
The Strategic Report is set out on pages 1-67 and is incorporated into this
Directors’ report by reference.
Directors and their interests
The Directors of the Company who served during the financial year
ended
{
31 March 2022 and up to the date of signing the financial
statements are as follows: Jean-François van Boxmeer, Nick Read,
Margherita Della Valle, Sir
{
Crispin Davis, Michel Demaré, Dame Clara Furse,
Valerie Gooding, Deborah Kerr (appointed 1 March 2022), Maria Amparo
Moraleda Martinez and David Nish. Sanjiv Ahuja and Renee James
stepped down on 27 July 2021, and Olaf Swantee stepped down
on
{
25
{
September 2021. A summary of the rules related to
{
the
appointment
{
and replacement of Directors and Directors’ powers can
be
{
found on page 236. Details of Directors’ interests in the Company’s
ordinary shares, options held over ordinary shares, interests in share
options and long-term incentive plans are set out on pages 93-112.
Directors’ conflicts of interest
Established within the Company is a procedure for managing and
monitoring conflicts of interest for Directors. Details of this procedure
are
{
set out on page 81.
Directors’ indemnities
In accordance with our Articles of Association and to the extent permitted
by law, Directors are granted an indemnity from the Company in respect
of liability incurred as a result of their office. In addition, we maintained
a
{
Directors’ and officers’ liability insurance policy throughout the year.
Neither our indemnity nor the insurance provides cover in the event
that
{
a Director is proven to have acted dishonestly or fraudulently.
Disclosures required under Listing Rule 9.8.4
The information on the amount of interest capitalised and the treatment
of tax relief can be found in notes 5 and 6 to the consolidated financial
statements respectively. The remaining disclosures required by Listing
Rule 9.8.4 are not applicable to Vodafone.
Capital structure and rights attaching to shares
Ordinary shares of Vodafone Group Plc are traded on the London
Stock
{
Exchange and in the form of American Depositary Shares (‘ADS’)
on
{
NASDAQ.
ADSs, each representing 10 ordinary shares, are traded on NASDAQ
under
{
the symbol ‘VOD’. The ADSs are evidenced by American
Depositary
{
Receipts (‘ADR’) issued by
{
J.P. Morgan, as depositary, under a
deposit agreement, dated 15
{
February 2022 between the Company, the
depositary and the holders
{
from time to time of ADRs issued thereunder.
ADS holders are not shareholders in the Company but may instruct
J.P.
{
Morgan on the exercise of voting rights relative to the number
of
{
ordinary shares represented by their ADSs. See “Articles of
Association
{
and applicable English law” and “Rights attaching
to
{
the
{
Company’s shares – Voting rights” on page 236.
Directors’ report
Strategic report
Governance
Financials
Other information
115
Vodafone Group Plc
Annual Report 2022
All information relating to the Company’s capital structure, rights
attaching to shares, dividends, the policy to repurchase the Company’s
own shares, details of Company share repurchases and details of other
shareholder information is contained on pages 32-33 and pages 234-239.
Change of control
Details of change of control provisions in the Company’s revolving credit
facilities are set out in note 22 “Capital and financial risk management”.
Information on agreements between the Company and its Directors
providing for compensation for loss of office of employment (including
details of change of control provisions in share schemes) is set out on
pages 97-98. Subject to that, there are no agreements between the
Company and its employees providing for compensation for loss of
office
{
or employment that occurs because of a takeover bid.
Dividends
Full details of the Company’s dividend policy and proposed final dividend
payment for the year ended 31 March 2022 are set out on page 33 and
note 9 to the consolidated financial statements.
Sustainability
Information about the Company’s approach to sustainability risks and
opportunities is set out on pages 34-57. Details of our greenhouse gas
emissions are also included on these pages.
Political donations
No political donations or contributions to political parties under
the
{
Companies Act 2006 have been made during the financial year.
The
{
Group policy is that no political donations be made or political
expenditure incurred.
Financial risk management objectives and policies
Disclosures relating to financial risk management objectives and
policies,
{
including our policy for hedging are set out in note 22 to the
consolidated financial statements and disclosures relating to exposure
to
{
credit risk, liquidity risk and market risk are outlined in note
{
22.
Important events since the end of the financial year
There were no important events affecting the Company which have
occurred since the end of the financial year.
Future developments within the Group
The Strategic Report contains details of likely future developments within
the Group.
Group policy compliance
Each Group policy is owned by a member of the Executive Committee so
that there is clear accountability and authority for ensuring the associated
business risk is adequately managed. Regional Chief Executives and the
Senior Leadership Team member responsible for each Group function
have primary accountability for ensuring compliance with all Group
policies by all our markets and entities.
Our Group compliance team and policy champions support the policy
owners and local markets in implementing policies and monitoring
compliance. All of the key Group policies have been consolidated into
the
{
Vodafone Code of Conduct which applies to all employees and
those
{
who work for or on behalf of Vodafone. It sets out the standards
of
{
behaviour expected in relation to areas such as insider dealing,
bribery
{
and raising concerns through the whistle blowing process
(known
{
internally as ‘Speak Up’).
Read more
on page 47
Branches
The Group, through various subsidiaries, has branches in a number of
different jurisdictions in which the business operates. Further details are
included in note 31.
Employee disclosures
Vodafone is an inclusive employer and diversity is important to us.
We
{
give
{
full and fair consideration to applications for employment by
disabled
{
persons and the continued employment of anyone incurring
a
{
disability while employed by us. Training, career development and
promotion opportunities are equally applied for all our employees,
regardless of disability. Our disclosures relating to the employment of
women in senior management roles, diversity, employee engagement
and policies are set out on page 14, pages 39 and 40, page 78 and
page
{
81.
By order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
17 May 2022
Strategic report
Governance
Financials
Other information
116
Vodafone Group Plc
Annual Report 2022
117
Directors’ statement of responsibility
119
Independent auditor’s report to the members of Vodafone Group Plc
129
Consolidated financial statements
129
Consolidated income statement
129
Consolidated statement of comprehensive income
130
Consolidated statement of financial position
131
Consolidated statement of changes in equity
132
Consolidated statement of cash flows
133
Notes to the consolidated financial statements
133
1.
Basis of preparation
Income statement
139
2.
Revenue disaggregation and segmental analysis
145
3.
Operating profit
146
4.
Impairment losses
153
5.
Investment income and financing costs
154
6.
Taxation
159
7.
Discontinued operations and assets held for sale
160
8.
Earnings per share
160
9.
Equity dividends
Financial position
161
10.
Intangible assets
163
11.
Property, plant and equipment
165
12.
Investments in associates and joint arrangements
171
13.
Other investments
172
14.
Trade and other receivables
173
15.
Trade and other payables
174
16.
Provisions
175
17.
Called up share capital
Cash flows
176
18.
Reconciliation of net cash flow from operating activities
176
19.
Cash and cash equivalents
177
20.
Leases
180
21.
Borrowings
182
22.
Capital and financial risk management
Employee remuneration
191
23.
Directors’ and key management compensation
192
24.
Employees
193
25.
Post employment benefits
197
26.
Share-based payments
Additional disclosures
199
27.
Acquisitions and disposals
200
28.
Commitments
200
29.
Contingent liabilities and legal proceedings
204
30.
Related party transactions
205
31.
Related undertakings
214
32.
Subsidiaries exempt from audit
215
Company financial statements of
Vodafone Group Plc
215
Company statement of financial position of Vodafone Group Plc
216
Company statement of changes in equity of Vodafone Group Plc
217
Notes to the Company financial statements
217
1.
Basis of preparation
219
2.
Fixed assets
220
3.
Debtors
220
4.
Other investments
220
5.
Creditors
221
6.
Called up share capital
221
7.
Share-based payments
221
8.
Reserves
222
9.
Equity dividends
222
10.
Contingent liabilities and legal proceedings
222
11.
Other matters
223
Non-GAAP measures (unaudited information)
233
Additional information (unaudited information)
Reporting on our financial performance
Index
Strategic report
Governance
Financials
Other information
117
Vodafone Group Plc
Annual Report 2022
Directors’ statement of responsibility
The Directors are responsible for preparing the
financial
b
statements in accordance with applicable
law
b
and regulations and keeping proper accounting
records. Detailed below are statements made by
the
b
Directors in
b
relation to their responsibilities,
disclosure of
b
information to the Company’s auditor,
going concern
b
and management’s report on
internal
b
control
b
over financial reporting.
Financial statements and accounting records
Company law of England and Wales requires the Directors to prepare
financial statements for each financial year which give a true and fair
view
{
of the state of affairs of the Company and of the Group at the end
of
{
the financial year and of the profit or loss of the Group for that period.
In
{
preparing those financial statements the Directors are required to:
–
select suitable accounting policies and apply them consistently;
–
make judgements and estimates that are reasonable and prudent;
–
present information, including accounting policies, in a
manner
{
that
{
provides relevant, reliable, comparable and
understandable information;
–
state whether the consolidated financial statements have been
prepared in accordance with UK-adopted International Accounting
Standards (‘IAS’), with International Financial Reporting Standards
(‘IFRS’) as issued by the International Accounting Standards Board
(‘IASB’) and with the requirements of the UK Companies Act 2006
(the
{
‘Act’); state for the Company’s financial statements whether
applicable UK
{
accounting standards have been followed; and
–
prepare the financial statements on a going concern basis unless it
is
{
inappropriate to presume that the Company and the Group will
continue in business.
The Directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position
{
of the Company and of the Group and enable them to
ensure
{
that the financial statements are prepared in accordance
with
{
UK-adopted IAS, with IFRS as issued by the IASB and with the
requirements of the Act. They are also responsible for the system
of
{
internal control, for safeguarding the assets
{
of the Company and the
Group and for taking reasonable steps for the prevention and detection
of
{
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility statement
Each of the Directors, whose names and functions are listed on pages 73
and 74, confirms that, to the best of his or her knowledge:
–
the consolidated financial statements, prepared in accordance
with
{
UK-adopted IAS, with IFRS as issued by the IASB and with the
requirements of the Act, give a true and fair view of the assets, liabilities,
financial position and profit of the
{
Group;
–
the parent company financial statements, prepared in accordance with
United Kingdom generally accepted accounting practice, give a true
and fair view of the assets, liabilities, financial position and profit of the
Company; and
–
the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group, together
with a description and robust assessment of the principal risks and
uncertainties that it faces.
The Directors are also responsible under section 172 of the Companies
Act 2006 to promote the success of the Company for the benefit of
its
{
members as a whole and in doing so have regard for the needs of
wider society and stakeholders, including customers, consistent with
the
{
Group’s core and sustainable business objectives.
Having taken advice from the Audit and Risk Committee, the Board
considers the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy.
Neither the Company nor the Directors accepts any liability to any person
in relation to the Annual Report except to the extent that such liability
could arise under English law. Accordingly, any liability to a person
who
{
has demonstrated reliance on any untrue or misleading statement
or
{
omission shall be determined in accordance with section 90A and
schedule 10A of the Financial Services and Markets Act 2000.
Disclosure of information to the auditors
Having made the requisite enquiries, so far as the Directors are aware,
there is no relevant audit information (as defined by section 418(3) of
the
{
Companies Act 2006) of which the Company’s auditor is unaware and
the Directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
Strategic report
Governance
Financials
Other information
118
Vodafone Group Plc
Annual Report 2022
Going concern
The Group’s business activities, performance, position, principal risks and
uncertainties and the Directors’ assessment of its long-term viability are
set out on page 65.
In addition, the funding position of the Group is included in ‘Borrowings’
and
{
’Capital and financial risk management’ in notes 21 and 22, respectively,
to the consolidated financial statements. Notes 21 and 22
{
include
disclosure in relation to the Group’s objectives, policies and processes
for
{
managing as well as details regarding its capital, its financial risk
management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk. As
{
noted on
page 184, the Group has access to substantial cash and financing facilities.
The Group also believes it adequately manages or mitigates its solvency
and liquidity risks through two primary processes, described below.
Business planning process and performance management
The Group’s forecasting and planning cycle consists of three in-year
forecasts, a budget and a long-range plan. These generate income
statement, cash flow and net debt projections for assessment by
Group
{
management and the Board. Each forecast is compared with
prior
{
forecasts and actual results to identify variances and understand
the
{
drivers of the changes and their future impact so management can
take action where appropriate. Additional analysis is undertaken to review
and sense check the key assumptions underpinning the forecasts.
Cash flow and liquidity reviews
The business planning process provides outputs for detailed cash
flow
{
and liquidity reviews, to ensure that the Group maintains adequate
liquidity throughout the forecast periods. The prime output is a liquidity
forecast which is prepared and updated at least on a monthly basis which
highlights the extent of the Group’s liquidity based on controlled cash
flows and the headroom under the Group’s undrawn revolving credit
facility. The key inputs into this forecast are:
–
Free cash flow forecasts with information taken from the business
planning process;
–
Bond and other debt maturities; and
–
Expectations for shareholder returns, spectrum auctions and
M&A
{
activity.
The liquidity forecast is reviewed by the Group Chief Financial Officer
and
{
included in each of her reports to the Board. In addition, the Group
continues to manage its foreign exchange and interest rate risks within
the framework of policies and guidelines authorised and reviewed by
the
{
Board, with oversight provided by the Treasury Risk Committee.
The Group’s financial performance was resilient during the COVID-19
pandemic and the residual impact has been considered as part of the
business planning process and reflected in the Group’s cash flow
forecasts. The Directors have also considered sensitivities in respect
of
{
potential downside scenarios in concluding that the Group is able
to
{
continue in operation for the period to 30 June 2023 from the date
of
{
approving the consolidated financial statements. Those sensitivities
include the non-refinancing of debt maturities in the assessment period.
A
{
reverse stress test was also reviewed to understand how severe
conditions would have to be to breach liquidity including the required
reduction in Adjusted EBITDAaL. In addition to the liquidity forecasts,
downside scenarios and reverse stress test that are prepared, the
Director’s considered the availability of the
{
Group’s €7.6
{
billion
undrawn
{
revolving credit facilities as at 31
{
March
{
2022.
In reaching their conclusion on the going concern assessment,
the
{
Directors
{
also considered the findings of the work performed
to
{
support
{
the statement on the long-term viability of the Group.
As
{
noted
{
on page
{
65, this included key changes to relevant principal
risks
{
in
{
light of
{
global economic and political uncertainty, sensitivity
analysis,
{
scenario assessments, and combinations of these, over the
viability assessment period.
Conclusion
Based on the review, the Directors have a reasonable expectation that
the
{
Company and the Group have adequate resources to continue
in
{
operational existence for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis in preparing the
Annual Report and Accounts.
Controls over financial reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Group.
The Group’s internal control over financial reporting includes policies
and
{
procedures that:
–
Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect transactions and dispositions of assets;
–
Are designed to provide reasonable assurance that transactions
are
{
recorded as necessary to permit the preparation of financial
statements in accordance with UK-adopted IAS, with IFRS as issued
by
{
the IASB and with the requirements of the Act and that receipts and
expenditures are being made only in accordance with authorisation of
management and
{
the Directors of the Company; and
–
Provide reasonable assurance regarding prevention or timely detection
of unauthorised acquisition, use or disposition of the Group’s assets
that could have a material effect on the financial statements.
Any internal control framework, no matter how well designed, has
inherent limitations including the possibility of human error and the
circumvention or overriding of the controls and procedures, and may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or because the
degree of compliance with the policies or procedures may deteriorate.
By order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
17 May 2022
Directors’ statement of responsibility (continued)
Strategic report
Governance
Financials
Other information
119
Vodafone Group Plc
Annual Report 2022
Opinion
In our opinion:
–
Vodafone Group Plc’s consolidated financial statements and Company
financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at
31
{
March 2022 and of the Group’s profit for the year then ended;
–
the consolidated financial statements have been properly prepared
in
{
accordance with UK adopted international accounting standards
and
{
International Financial Reporting Standards (IFRS) as issued by
the
{
International Accounting Standards Board (IASB);
–
the Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice; and
–
the financial statements have been prepared in accordance with
the
{
requirements of the Companies Act 2006.
We have audited the financial statements of Vodafone Group Plc
(the
{
“Parent company”) and its subsidiaries (the “Group”) for the year
ended
{
31 March 2022 which comprise:
Group
Parent company
Consolidated statement
of
{
financial position as at
31
{
March
{
2022
Company statement of financial
position as at 31 March 2022
Consolidated income statement
for the year then ended
Company statement of changes
in
{
equity for the year then ended
Consolidated statement of
comprehensive income for
the
{
year then ended
Related notes 1 to 11 to the
financial statements including
a
{
summary of significant
accounting policies
Consolidated statement of
changes in equity for the year
then
{
ended
Consolidated statement of cash
flows for the year then ended
Related notes 1 to 32 to the
financial statements, including
a
{
summary of significant
accounting policies
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and UK
adopted international accounting standards and International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The financial reporting framework that has
been
{
applied in the preparation of the Parent company financial
statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards
on
{
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the ‘Auditor’s responsibilities for the
audit of the financial statements’ section of our report. We believe that
{
the
audit evidence we have obtained is sufficient and appropriate to
{
provide a
basis for our opinion.
Independence
We are independent of the Group and Parent in accordance with
the
{
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to
{
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were
not
{
provided to the Group or the Parent company and we remain
independent of the Group and the Parent company in conducting
the
{
audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the Group and Parent company’s ability to continue
to
{
adopt the going concern basis of accounting included:
–
confirming our understanding of the directors’ going concern
assessment process, including the controls over the review and
approval of the budget and long-range plan;
–
assessing the appropriateness of the duration of the going concern
assessment period to 30 June 2023 and considering the existence of
any significant events or conditions beyond this period based on our
procedures on the Group’s long-range plan and knowledge arising
from other areas of the audit;
–
verifying inputs against board-approved forecasts and debt facility
terms and reconciling the opening liquidity position to the prior year
end and half year interim going concern assessments;
–
reviewing borrowing facilities to confirm both their availability to the
Group and the forecast debt repayments through the going concern
assessment period and to validate that there is no financial covenant
in
{
relation to any of loan arrangements;
–
evaluating management’s historical forecasting accuracy and the
consistency of the going concern assessment with information
obtained from other areas of the audit, such as our audit procedures
on
{
the long-range plans, which underpin management’s goodwill
impairment assessments;
–
testing the assessment, including forecast liquidity, for clerical accuracy;
–
assessing whether assumptions made were reasonable and appropriately
severe, in light of the Group’s relevant principal risks and uncertainties
and our own independent assessment of those risks;
–
evaluating the amount and timing of identified mitigating actions available
to respond to a severe downside scenario, and whether those actions
are feasible and within the Group’s control;
–
considering the appropriateness of management’s ‘reverse stress test’
downside scenario, to understand how severe conditions would have
to be to breach liquidity and whether the reduction in EBITDAaL required
has no more than a remote possibility of occurring;
–
performing independent sensitivity analysis on management’s
assumptions including applying incremental adverse cashflow
sensitivities. These sensitivities included the impact of certain severe
but plausible scenarios, evaluated as part of management’s work on
the Group’s long term viability including the war in Ukraine, materialising
within the going concern assessment period; and
–
assessing the appropriateness of the going concern disclosure on
page
{
118.
Independent auditor’s report to the members of Vodafone Group Plc
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120
Vodafone Group Plc
Annual Report 2022
Our key observations
–
The directors’ assessment forecasts that the Group will maintain
sufficient liquidity throughout the going concern assessment period.
This included the scenario of non-refinancing of debt maturities in the
assessment period and also the availability of the Group’s €7.6 billion
revolving credit facilities, undrawn as at 31 March 2022. Furthermore,
management’s reverse stress test to model the extent of the EBITDAaL
reduction compared to forecasts required to breach liquidity during the
going concern assessment period is considered to have only a remote
possibility of occurring.
–
The controllable mitigating actions available to management to
increase liquidity over the going concern assessment period were
not
{
modelled by management, nor the audit team, due to the level
of
{
headroom in both the directors’ assessment forecasts and the
audit
{
team’s additional downside sensitivities.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or
{
collectively, may cast significant doubt on the Group and Parent
company’s ability to continue as a going concern for a period from
when
{
the financial statements are authorised for issue to 30 June 2023.
In relation to the Group and Parent company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to
{
going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s ability to continue as
a
{
going concern.
Overview of our audit approach
Audit scope
–
We performed an audit of the complete
financial
{
information of 9 components, full
audit
{
procedures on specific balances for
4
{
components, specified audit procedures on
specific balances for a further 6 components
and other procedures on the remaining
292
{
components.
–
The components where we performed
full
{
audit
{
procedures accounted for 75% of
Adjusted EBITDAaL and where we performed
full or specified procedures in respect of
revenue accounted for 78% of Revenue.
Key audit matters
–
Revenue recognition
–
Carrying value of cash generating units,
including goodwill
–
Recognition and recoverability of deferred
tax
{
assets on tax losses – Luxembourg
Materiality
–
Overall Group materiality of €290m (FY21:
€280m) has been calculated based on Adjusted
EBITDAaL as defined in the ‘Our application of
materiality’ section of this report. This materiality
represents approximately 2% of the Group’s
Adjusted EBITDAaL as reported in Note 2 in
the
{
Consolidated financial statements.
An overview of the scope of the Company
and
{
Group
{
audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each
{
component within the Group. Taken together, this enables us to
form an opinion on the consolidated financial statements. We take into
account size, risk profile, the organisation of the Group and effectiveness
of group-wide controls, changes in the business environment and other
factors such as recent internal audit results when assessing the level of
work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the consolidated financial statements, of the
311
{
reporting components of the Group, we selected 19 components
covering entities within Germany, South Africa, Italy, United Kingdom,
Spain, Turkey, Czech Republic, Hungary, Egypt, Luxembourg and
corporate entities, which represent the principal business units within
the
{
Group.
Of the 19 components selected, we performed an audit of the complete
financial information of 9 components (“full scope components”) which
were selected based on their size or risk characteristics.
For 4 components (“specific scope components”), we performed full
audit
{
procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant
accounts in the consolidated financial statements either because of
the
{
size of these accounts or their risk profile. For the remaining 6
components (“specified procedures components”), we performed
certain
{
audit procedures on specific accounts within that component that
we considered had the potential for the greatest impact on the significant
accounts in the financial statements, either because of the size of these
accounts or their risk profile. Depending on the component or type of
procedures, these procedures were undertaken by the primary audit
team
or separate component audit team under the primary audit team’s direction.
The audit scope of these components may not
have included t
esting of all
significant accounts of the component, but will have contributed to the
coverage of significant accounts tested for the Group.
For the 302 components where we did not perform full audit procedures,
together these represent 25% of the Group’s Adjusted EBITDAaL, and
none are individually greater than 5% of the Group’s Adjusted EBITDAaL.
For the remaining 292 components which are not full scope, specific
scope or specified procedures scope, we performed other procedures,
including analytical review at both the Group and individual component
levels and the use of customised data analytics tools over the purchase
to
{
pay process, fixed assets to profile trends and identify items for further
investigation, inquiry of management, testing entity level controls, testing
group-wide controls and testing of journals across the Group, including
these remaining components, in order to respond to any potential risks
of
{
material misstatement to the consolidated financial statements.
Independent auditor’s report to the members of Vodafone Group Plc (continued)
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Vodafone Group Plc
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Changes from the prior year
The approach to audit scoping is similar to the prior year audit, with the
rotation of a number of markets, designated as specified procedures
scope for selected significant accounts, to extend the Group audit
procedures beyond the Group’s main markets and to introduce a level
of
{
unpredictability through rotational testing. This approach resulted in:
–
a specified procedure scope being assigned to components in
Czech
{
Republic and Hungary which were not subject to direct
audit
{
procedures in the prior year; and
–
Greece, Romania, Vantage Towers Germany and Vantage Towers Spain
being reassessed as other procedures components in the current year.
Involvement with component audit teams
In establishing our overall approach to the Group audit, we determined
the type of work that needed to be undertaken at each of the components
by us, as the primary audit team, or by component auditors from other EY
global network firms operating under our instruction. Of the 9 full scope
components, audit procedures were performed on 2 of these directly
by
{
the primary audit team with the remaining 7 being performed by
component audit teams. For the 4 specific scope components, the
procedures were performed directly by the primary audit team. For
the
{
6
{
specified procedures scope components, work was performed
directly by the primary audit team for 2 of these, with the remaining
4
{
being performed by component audit teams. Where the work was
performed by
{
component auditors, we determined the appropriate level
of involvement to enable us to determine that sufficient audit evidence
had
{
been obtained as a basis for our opinion on the consolidated financial
statements as a whole.
Vodafone has centralised processes and controls over certain areas
within
{
its Vodafone Intelligent Solutions (“VOIS”) finance shared service
centre locations. The primary audit team performs direct oversight, review,
and coordination of the EY audit teams at VOIS locations, whose work
includes centralised testing for certain controls and accounts, including
specified procedures on revenue, leases, cash and centralised purchase
to
{
pay processes.
The table below illustrates the coverage obtained from the work performed by our audit teams.
2022
2021
Reporting components
Number
% of Group
Adjusted EBITDAaL*
% of Group Revenue
Note
Number
% of Group
Adjusted EBITDA*
% of Group Revenue
Full scope
9
75%
71%
1, 2, 5
9
76%
71%
Specific scope
4
0%
0%
3
Specified procedures
6
0%
7%
2, 4, 5
12
0%
8%
Full and specified procedures coverage
19
75%
78%
21
76%
79%
Remaining components
292
25%
22%
6, 7, 8
343
24%
21%
Total reporting components
311
100%
100%
364
100%
100%
Notes:
1.
2 of the 9 full scope components relate to the Company and another corporate entity whose activities include consolidation adjustments, which are audited by the primary audit team. Procedures on
3 of the other full scope locations are undertaken by component audit teams based in Germany and the remaining 4 full scope components are Italy, South Africa, Spain, and the UK.
2.
The Group audit risks in relation to revenue recognition were subject to audit procedures at each of the full and specified procedures scope locations with significant revenue streams (being 7 full scope
components and 3 specified procedures components).
3.
The primary audit team performed full audit procedures on specific accounts in respect of 4 finance and corporate entities across a range of significant accounts. The audit procedures did not include
testing of all significant accounts of the components but will have contributed to the coverage of significant accounts selected for testing by the primary audit team.
4.
For the Turkey, Czech Republic and Hungary components, specified procedures were defined by the Group team in respect of Revenue, Cost of sales, Operating expenses, Intangible assets, Property,
Plant
{
and Equipment, Trade receivables, Trade and other payables and Cash. For the Egypt component, specified procedures were performed in respect of certain Intangible Assets and Cash. The primary
audit team also performed specified procedures over a further 2 entities across a range of significant accounts. The audit procedures did not include testing of all significant accounts of the components
but
{
will have contributed to the coverage of significant accounts selected for testing by the primary audit team.
5.
The Group audit risks in relation to ‘Carrying value of cash generating units, including goodwill’ and ‘Recognition and recoverability of deferred tax assets on tax losses – Luxembourg’ were subject to
audit
{
procedures by the primary audit team on the entire balance, with support from component audit teams on certain procedures.
6.
The contribution of specified procedures components to Group Adjusted EBITDAaL is included within ‘remaining components’ as audit procedures were performed on certain, but not all, significant
accounts of the specified procedures components contributing to Group Adjusted EBITDAaL.
7.
Included within the 311 reporting components are the Group’s joint venture investments in Vodafone Ziggo and INWIT, and Safaricom, an associate, which were subject to review procedures.
8.
Changes in the number of remaining components compared to prior year reflect decreases in the number of entities within the Group’s consolidation system.
*
Adjusted EBITDAaL as defined in ‘Our application of materiality’ section of this report. Adjusted EBITDAaL was referred to as Adjusted EBITDA in prior years. The metrics have the same definition.
Impact of the COVID-19 pandemic – direction, supervision
and
{
review of component audit teams
Due to the ongoing travel restrictions imposed by the COVID-19
pandemic, physical site visits were only possible to certain locations
during the FY22 audit; for other locations these were performed virtually.
Physical site visits were undertaken by the Senior Statutory Auditor and/
or primary audit team members to component audit teams in Germany,
Spain, Italy, UK, Czech Republic, Hungary and Egypt. These visits involved
discussing the audit approach with the component team and any issues
arising from their work, meeting with local management, attending key
meetings and reviewing relevant audit working papers on risk areas.
Virtual site visits were undertaken by the primary audit team to the
component audit teams in South Africa and Turkey. These followed the
same format as the physical site visits but used our global audit software,
screen sharing or the provision of copies of work papers direct to the
primary audit team, to enable the Senior Statutory Auditor, and other
members of the primary audit team, to complete reviews of key
component audit team working papers, particularly focussing on the
Group’s risk areas. For all full scope and specified procedures overseas
components, during the year we conducted meetings using video
conferencing to discuss the audit approach and execution with the
component audit teams and to discuss audit issues arising from their
work. The Senior Statutory Auditor, or other members of the primary
audit
{
team, attended key meetings with local management via video
conference, to discuss the component’s business performance and
matters relating to the local finance organisation including the internal
financial control environment.
The primary audit team interacted regularly with the local EY full scope
and specified procedures component teams where appropriate during
various stages of the audit, reviewed relevant working papers and were
responsible for the scope and direction of the audit process. We maintained
continuous and open dialogue with the component audit teams
in addition
to holding formal meetings to ensure that we were fully aware of their
progress and the results of their procedures. Close meetings for full, specific,
and specified procedures components (excluding those performed by
the
primary audit team) were held via video conference in April 2022 and were
attended by the Senior Statutory Auditor and/or other members of the
primary audit team. This, together with the additional procedures performed at
Group level, gave us appropriate evidence for our opinion on the consolidated
financial statements.
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Vodafone Group Plc
Annual Report 2022
Climate change
There has been increasing interest from stakeholders as to how
climate
{
change will impact Vodafone Group Plc. The Group has
determined that the most significant future impacts from climate change
on its operations will be from its Planet activities and commitments set
out on pages 41 to
{
44 and the material climate-related physical and
transitional risks explained on pages 66 to 67 in the required Task Force
for Climate related
{
Financial Disclosures, both of which form part of the
“Other information”, rather than the audited financial statements. Our
procedures on these disclosures therefore consisted solely of considering
whether they are materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit or otherwise appear
to
{
be materially misstated.
As explained in Note 1 Basis of Preparation to the consolidated financial
statements, environmental, regulatory and other factors responsive to
climate change risks are still developing, and are outside of the Group’s
control, and consequently financial statements cannot capture all
possible future outcomes as these are not yet known. The degree of
certainty of these changes may also mean that they cannot be taken into
account when determining asset and liability valuations and the timing
of
{
future cash flows under the requirements of UK-adopted International
Accounting Standards and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
The
{
significant accounting estimates and judgements assessed by
management to be potentially impacted by climate risks have been
described in Note 1 and with further disclosure in respect of the impact
on the Group’s long-range plans and deferred tax asset recognition
provided in Note 4 and Note 6 respectively.
Our audit effort in considering climate change was focused on ensuring
that the effects of material climate risks disclosed on page 67 have been
appropriately reflected in asset values and associated disclosures where
values are determined through modelling future cash flows, being ‘Goodwill’,
‘Other intangible assets’ and ‘Deferred tax assets’, and in the timing and
nature of liabilities recognised, being ‘Asset Retirement Obligations’. The
findings from our procedures supported our evaluation of the adequacy
of climate change considerations in the Directors’ assessment of going
concern and viability and associated disclosures.
Independent auditor’s report to the members of Vodafone Group Plc (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context
of
{
our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Strategic report
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Vodafone Group Plc
Annual Report 2022
Risk
Revenue recognition
As more fully described in Note 2, Note 14 and Note 15 to the consolidated financial statements, the Group reported revenue of €45,580 million
(FY21:
{
€43,809 million), contract assets of €3,551 million (FY21: €3,566 million) and contract liabilities of €2,521 million (FY21: €2,490million) for the
year ended and as at 31 March 2022. Management records revenue according to the principles of IFRS 15, Revenue from Contracts w
ith Customers,
including following the 5-step model therein. Under IFRS 15, management must determine if there are separate performance obligations for the
services and goods it provides to customers and assign values thereto, based on the selling prices of goods or services in separate transactions
under
{
similar conditions to similar customers (the “stand-alone selling price”).
Auditing the revenue recorded by the Group is complex due to the multiple IT systems and tools utilised in the initiation, processing and recording
of
{
transactions, which includes a high volume of individually low monetary value transactions. Furthermore, judgement and the invo
lvement of IT
professionals was required to determine the audit approach to test and evaluate the relevant data that was captured and aggregated, and to assess the
sufficiency of the audit evidence obtained. In addition, determining the stand-alone selling price and therefore the allocation of revenue to the different
performance obligations, which impacts timing of the related revenue recognition, is complex and judgemental, particularly on new product offerings
and non-standard enterprise contracts.
We have also identified a risk of management override through inappropriate manual topside revenue journal entries, given revenue is a key
performance indicator, both in external communication and for management incentives.
Our response to the risk
We performed full or specified audit procedures over this risk area in 7 full scope and 3 specified procedure components with significant revenue
streams, which covered 78% of the Group’s revenue.
Our audit procedures at full scope component locations included, among others, obtaining an understanding of, evaluating the design and testing the
operating effectiveness of controls over the Group’s revenue recognition process, which includes management’s review of contracts, their identification
of performance obligations, the estimation of the relative standalone selling price for each performance obligation, and the determination of the timing
of revenue recorded. With the support of our IT professionals, we also evaluated the design and tested the operating effectiven
ess of controls over
the
{
appropriate flow of transactional data through the IT systems and tools and the reconciliation of the transactional data to the accounting records.
For specified procedures components, we obtained an understanding of the design of controls over the revenue recognition process.
We evaluated management’s accounting policies and the methodology used by management to determine the standalone selling price, where
relevant to the requirements of IFRS 15.
For significant revenue streams, our audit procedures included the following, on a sample basis:
–
We obtained a list of new propositions/tariff plans introduced during the period and tested the completeness of the listing. We
evaluated
management’s assessment of the accounting treatment for new propositions/tariff plans for compliance with IFRS 15.
–
For each significant revenue IT system, we obtained the billing data to general ledger reconciliation which included the relevant adjustments to
deferred and accrued revenue balances. We reperformed these end-to-end reconciliations, including assessing the accuracy of the data inputs
to
{
underlying source documentation including contractual agreements where applicable. In addition, we tested the mathematical accu
racy
and
{
completeness of the reconciliations and any material reconciling items including significant revenue postings outside of the billing systems.
–
We recalculated the revenue recognised to evaluate whether the processing of the revenue recognition by the Group’s IT systems was
materially
{
correct.
–
We corroborated the standalone selling price allocated to individual elements of bundled contracts, including to observable market pricing
where
{
available.
–
We used data analytic tools to identify revenue related manual journals posted to the general ledger and traced these back to s
ource systems.
This
{
included analytical procedures to consider the completeness of journal postings. We obtained and evaluated underlying source documentation
to test the completeness and accuracy of the postings, including those journals we considered unusual in nature.
We also assessed the adequacy of the Group’s disclosures in respect to the accounting policies on revenue recognition.
Key observations communicated to the Audit and Risk Committee
Based on the procedures performed, including those in respect of manual adjustments to revenue, we did not identify any evidence of material
misstatement in the revenue recognised in the year nor in amounts capitalised or deferred as at 31 March 2022.
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Vodafone Group Plc
Annual Report 2022
Risk
Carrying value of cash generating units, including goodwill
As more fully described in Note 4 to the consolidated financial statements, in accordance with IAS 36 Impairment of Assets, the Group calculates the
value in use (“VIU”) for cash generating units (“CGUs”) to determine whether an adjustment to the carrying value of the CGU, and therefore, goodwill, is
required. As of 31 March 2022, the Group has recorded €31,884 million of goodwill, primarily in respect of Germany, Italy and Vantage Towers Germany.
The Group’s assessment of the VIU of its CGUs involves estimation about the future performance of the local market businesses. In particular,
the
{
determination of the VIUs was sensitive to the significant assumptions of projected adjusted EBITDAaL growth, long-term growth
rates, and
discount
{
rates.
Auditing the Group’s annual impairment test was complex and involved significant auditor judgement, given the estimation uncertainty related to the
significant assumptions described above used in the VIU models and the sensitivity of certain VIU models to fluctuations in those assumptions, including
where those CGUs had historical impairments, market specific events or other factors which resulted in low headroom.
Our response to the risk
The recoverability of the Group’s goodwill balances was subject to full scope audit procedures performed by the primary audit team with support from
relevant component audit teams on certain procedures.
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Group’s goodwill impairment review
process, including management’s controls over the significant assumptions described above.
To test the determination of the VIU of the Group’s goodwill, we performed audit procedures that included, among others, evaluating the
appropriateness of the determination of the CGUs identified and testing the allocation of assets and liabilities to the carrying value of each CGU.
For the annual impairment assessment as at 31 March 2022, we also tested, with the help of a valuation specialist, the methodology applied in the
VIU
{
models, as compared to the requirements of IAS 36, including the mathematical accuracy of management’s model. We performed procedures
to
{
test and assess the significant assumptions used in the VIU models, including:
–
evaluating projected adjusted EBITDAaL growth, for example by comparing underlying assumptions to external data, such as economic and industry
forecasts for the relevant markets and for consistency with evidence obtained from other areas of our audit;
–
comparing long-term growth rates and discount rates to EY independently determined acceptable ranges;
–
performing sensitivity analyses on the above described assumptions in the VIU models to evaluate the parameters that, should they arise, would
cause an impairment of the CGU or indicate additional disclosures were appropriate; and
–
in considering the existence of contrary evidence, for management’s assessment of implied recoverable value we compared CGU EBITDAaL
multiples to market listed peers and considered independent analyst valuations for individual CGUs where available.
For each CGU, we compared the cash flow projections used in the VIU models to the information approved by the Group’s Board of Directors and
evaluated
{
the historical accuracy of management’s business plans, which underpin the VIU models by comparing prior year forecasts to actual results
in
{
the
{
current period.
We involved a valuation specialist in our team to assist us with certain of these audit activities.
We also assessed the adequacy of the related disclosures provided in Note 4 of the consolidated financial statements, in particular the sensitivity disclosures
in relation to reasonably possible changes in assumptions that could result in impairment.
Key observations communicated to the Audit and Risk Committee
We agree with management’s conclusion that the carrying value of the Group’s CGUs are supportable as at 31 March 2022 and that no impairment
charge is required to be recognised in the year.
We agree with management that additional sensitivity disclosures are required in Note 4 of the consolidated financial statements on the basis that a
reasonably possible change in certain key assumptions could lead to a different conclusion in respect of the recoverability of carrying value of certain
cash generating units.
Independent auditor’s report to the members of Vodafone Group Plc (continued)
Strategic report
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Vodafone Group Plc
Annual Report 2022
Risk
Recognition and recoverability of deferred tax assets on tax losses – Luxembourg
As more fully described in Note 6 to the consolidated financial statements, the Group recognises deferred tax assets in accordance with IAS 12
Income
{
Taxes, based on their estimated recoverability and whether management judges that it is probable that there will be sufficient and suitable
taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future.
A deferred tax asset in Luxembourg of €16,298 million (FY21: €17,394 million) has been recognised in respect of losses, as management concluded it
is
{
probable that the Luxembourg entities will continue to generate taxable profits in the future against which they can utilise these assets. Management
estimates that the losses will be utilised over a period of 45-48 years.
The Luxembourg companies’ income is derived from the Group’s internal financing, procurement and roaming activities. The forecast future finance
income can vary based on forecast interest rates and intercompany debt levels which in turn impacts the timeframe over which the deferred tax asset
is
{
forecast to be recovered.
Furthermore, Luxembourg owns direct and indirect interests in the Group’s operating activities. The value of these investments is primarily based on the
Group’s value in use calculations. Changes in the value for the purposes of local Luxembourg statutory financial statements can result in impairment
reversals or change which are taxable / tax deductible under local law. In the current year, there has been a reversal of a historical impairment, which
has resulted in the utilisation of brought forward tax losses, thereby reducing the carrying value of the deferred tax asset recognised and a reduced
timeframe over which the deferred tax asset, recognised at 31 March 2022, is forecast to be recovered.
Auditing the Group’s recognition and recoverability of deferred tax assets in Luxembourg is significant to the audit because it involves material amounts,
and the judgements and estimates in relation to future taxable profits and the period of time over which it is expected to utilise these assets, results in
increased estimation uncertainty.
Our response to the risk
Audit procedures on the recognition and recoverability of deferred tax assets on tax losses in Luxembourg were performed by the primary audit team
and its tax professionals with support from Luxembourg tax and transfer pricing specialists on certain procedures.
We obtained an understanding, evaluated the design and tested the operating effectiveness of management’s controls around the recognition of
deferred tax assets in Luxembourg, including the calculation of the gross amount of deferred tax assets recorded, the preparation of the prospective
financial information used to determine the Luxembourg entities’ future taxable income, and management’s identification and use of available
commercial strategies.
To test the realisability of the deferred tax assets in Luxembourg, with the support of tax professionals and tax specialists, our audit procedures included,
among others;
–
assessing the existence of available losses, including the impact of current year taxable profits resulting from roaming, procurement and finance
income and the reversal of previously recognised impairments within the local statutory financial statements;
–
evaluating management’s position on the recoverability of the losses with respect to local tax law and tax planning strategies adopted;
–
testing the calculation of the reversal of previous impairments, by agreeing the value in use calculations to our audit work performed on
‘Carrying
{
value of cash generating units, including goodwill’, assessing the Luxembourg ownership structure;
–
testing the reasonableness of the forecasted procurement and roaming taxable profits utilised in management’s realisability assessment,
by
{
comparing to historical actual profits and with evidence obtained from other areas of our audit;
–
evaluating the forecast finance income by, on a sample basis, recalculating income with reference to underlying agreements, comparing future
interest rates utilised in the forecasts to relevant external benchmarks and the assumed reductions in intergroup debt for consistency with our
understanding of relevant guidance in respect of transfer pricing of financial transactions;
–
assessing whether contrary evidence exists that is not consistent with either management’s stated intention that the financing structures will remain
in place or that it is probable that future taxable profits will exist; and
–
reviewing the adequacy of the disclosures in respect of the recognition of the deferred tax asset, which explain the evidence supporting the recognition,
judgements in respect of the utilisation profile including longer term uncertainties and the key drivers of changes in the carrying value of the asset
and the utilisation period.
Key observations communicated to the Audit and Risk Committee
We agree with the recognition of the deferred tax assets, and consequently the long recoverability period, on the basis of forecast profits which are
considered probable given management’s intention to retain current activities in Luxembourg over the long term and the track record of historical
profitability in these operations.
The reduction in the period of utilisation is consistent with the utilisation of losses during the period, the reversal of historic impairments in the local
statutory financial statements and forecast taxable profits in Luxembourg.
Strategic report
Governance
Financials
Other information
126
Vodafone Group Plc
Annual Report 2022
Our application of materiality
We apply the concept of materiality in planning and performing the audit,
in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
the
{
aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be €290 million (2021:
€280
{
million), which is approximately 2% (2021: 2%) of Adjusted EBITDAaL.
We believe that Adjusted EBITDAaL provides us with the most relevant
performance measure on which to determine materiality, given
the
{
prominence of this metric throughout the Annual Report and
consolidated financial statements, investor presentations, profit
metrics
{
focussed on by analysts and its alignment to the management
remuneration metric of adjusted EBIT. In the prior year, the materiality
basis included the add back of restructuring costs. These have not
been
{
added back in current year. There is no significant change in
the
{
materiality level resulting from this change.
We determined materiality for the Company to be €467 million (2021:
€445 million), which is 1% (2021: 1%) of the Company’s equity. However,
since the Company was a full scope component, for accounts that were
relevant for the Group financial statements, a performance materiality of
€42 million was applied.
During the course of our audit, we reassessed initial materiality with
the
{
only change in the final materiality from our original assessment at
planning being to reflect the actual reported performance during the year.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 75% (2021: 50%) of our planning materiality, namely
€218m (2021: €140m). We have set performance materiality at this
higher percentage due to:
–
Our view of the effectiveness of the control environment to prevent or
detect and correct errors and the low number of control deficiencies in
the prior year audit;
–
The resilience and pace of recovery of the business through the
COVID-19 pandemic; and
–
The reduced level and scale of M&A transactions during FY22
relative
{
to previous years.
Audit work at component locations for the purpose of obtaining audit
coverage over significant financial statement accounts is undertaken
based
{
on a percentage of total performance materiality. The performance
materiality set for each component is based on the relative scale and
risk
{
of the component to the Group as a whole and our assessment of the
risk
{
of misstatement at that component. In the current year, the range of
performance materiality allocated to components was €42m to €218m
(2021: €28m to €140m).
Reporting threshold
An amount below which identified misstatements are considered as being
clearly trivial.
We agreed with the Audit and Risk Committee that we would report to
them all uncorrected audit differences in excess of €15m (2021: €14m),
which is set at 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual
Report set out on pages 1 to 115, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other
information contained within the Annual Report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility
{
is to read the other information and, in doing so,
consider
{
whether the other information is materially inconsistent with
the
{
financial statements or our knowledge obtained in the course of
the
{
audit or otherwise appears to be materially misstated. If we identify
such
{
material inconsistencies or apparent material misstatements,
we
{
are
{
required to determine whether there is a material misstatement
in
{
the
{
financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
–
the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared
is
{
consistent with the financial statements; and
–
the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report
by
{
exception
In the light of the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or
the
{
directors’ report.
We have nothing to report in respect of the following matters in
relation
{
to which the Companies Act 2006 requires us to report to
you
{
if,
{
in our opinion:
–
adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches
not visited by us; or
–
the Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
–
certain disclosures of directors’ remuneration specified by law are not
made; or
–
we have not received all the information and explanations we require
for our audit.
Independent auditor’s report to the members of Vodafone Group Plc (continued)
Strategic report
Governance
Financials
Other information
127
Vodafone Group Plc
Annual Report 2022
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation
to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Company’s compliance
with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our
knowledge obtained during the audit:
–
Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 118;
–
Directors’ explanation as to its assessment of the company’s prospects,
the period this assessment covers and why the period is appropriate
set out on page 65;
–
Director’s statement on whether it has a reasonable expectation that
the Group will be able to continue in operation and meets its liabilities
set out on page 118;
–
Directors’ statement on fair, balanced and understandable set out on
page 117;
–
Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 117;
–
The section of the annual report that describes the review of effectiveness
of risk management and internal control systems set out on pages
86-87 and 114; and;
–
The section describing the work of the Audit and Risk Committee set
out on pages 83-88
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out
on pages 117-118, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for
{
assessing the Group and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations,
or
{
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial
{
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs
{
(UK)
will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
{
individually
or
{
in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable
of
{
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk
of
{
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or
{
through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company
and
{
management.
–
We obtained an understanding of the legal and regulatory
frameworks
{
that are applicable to the Group and determined that
the
{
most significant are those that relate to the reporting framework
(IFRS, FRS 101, the UK Companies Act 2006 and UK Corporate
Governance Code), the relevant tax compliance regulations in the
jurisdictions in which the Group operates and the EU General Data
Protection Regulation (GDPR).
–
We understood how the Group is complying with those frameworks
by
{
making enquiries of management, internal audit, those responsible
for legal and compliance procedures and the company secretary.
We
{
corroborated our enquiries through our review of board minutes
and papers provided to the Audit and Risk Committee, correspondence
received from regulatory bodies and attendance at all meetings of the
Audit and Risk Committee, as well as consideration of the results of our
audit procedures across the Group.
–
We assessed the susceptibility of the Group’s financial statements
to
{
material misstatement, including how fraud might occur by
meeting
{
with management from various parts of the business
including
{
management and finance teams of the local markets
designated as full, specific and specified procedures scope locations,
Head Office, the Audit and Risk Committee, the internal audit function,
the Group legal function and individuals in the fraud and compliance
department to understand where it considered there was susceptibility
to fraud; and assessing whistleblowing incidences for those with a potential
financial reporting impact. We also considered performance targets and
their propensity to influence on efforts made by management t
o
ma
nage
earnings or influence the perceptions of analysts. We considered the
programmes and controls that the Group has established to address
risks identified, or that otherwise prevent, deter and detect fraud, and
how senior management monitors those programmes and controls.
Strategic report
Governance
Financials
Other information
128
Vodafone Group Plc
Annual Report 2022
–
Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations, including
where necessary using our forensic specialists. Our procedures
involved enquiries of management at Head Office, the Audit and
Risk
{
Committee, the internal audit function, the Group legal function,
the corporate security team, individuals in the fraud and compliance
department (including those responsible for fraud investigation
and
{
whistleblowing); journal entry testing, with a focus on manual
consolidation journals and journals indicating large or unusual
transactions, based on our understanding of the business; and
challenging the assumptions and judgements made by management
in respect of significant one-off transactions in the financial year and
significant accounting estimates as referred to in the key audit matters
section above. At a component level, our full and specified procedure
scope component audit teams’ procedures included enquiries of
component management; journal entry testing; and focussed testing,
including in respect of the key audit matter of revenue recognition. We
also leveraged our data analytics capabilities in performing work on the
purchase to pay process and property, plant and equipment balances
and leases, to assist in identifying higher risk transactions and balances,
respectively, for testing.
–
If significant instances of non-compliance with laws and regulations
were identified, these were communicated to the relevant local EY
teams who performed sufficient and appropriate audit procedures,
supplemented by audit procedures performed at the Group level,
to
{
conclude that there was no material impact on the consolidated
financial statements.
–
Where the risk was considered to be higher, including areas impacting
Group key performance indicators or management remuneration,
we
{
performed audit procedures to address each identified fraud risk
or
{
other risk of material misstatement. These procedures included
those on revenue recognition referred to in the key audit matter
section above and testing manual journals and were designed to
provide reasonable assurance that the financial statements were
free
{
from material fraud or error.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Other matters we are required to address
–
Following the recommendation from the Audit and Risk Committee,
we were appointed by the Company on 23 July 2019 to audit
the
{
financial statements for the year ending 31 March 2020 and
subsequent financial periods.
The period of total uninterrupted engagement including previous
renewals and reappointments is three years, covering the years ending
31 March 2020 to 31 March 2022.
–
The audit opinion is consistent with the additional report to the
Audit
{
and Risk Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we
{
do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work,
for
{
this report, or for the opinions we have formed.
Alison Duncan (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
17 May 2022
Independent auditor’s report to the members of Vodafone Group Plc (continued)
Consolidated income statement
for the years ended 31 March
2022
2021
2020
Note
€m
€m
€m
Reven
ue
2
45,580
43,809
44,974
Cost of sales
(30,574)
(30,086)
(30,682)
Gross profit
15,006
13,723
14,292
Selling and distribution expenses
(3,358)
(3,522)
(3,814)
Administrative expenses
(5,713)
(5,350)
(5,810)
Net credit losses
on financial assets
22
(561)
(664)
(660)
Share of results of equity ac
counted associates and joint ventures
12
211
342
(2,505)
Impairment loss
4
–
–
(1,685)
Other income
3
79
568
4,281
Operating profit
3
5,664
5,097
4,099
Non-operating expense
–
–
(3)
Investment income
5
254
330
248
Financing costs
5
(1,964)
(1,027)
(3,549)
Profit before taxation
3,954
4,400
795
Income tax expense
6
(1,330)
(3,864)
(1,250)
Profit/(loss) for
the financial year
2,624
536
(455)
Attributable to:
– Owners of the parent
2,088
112
(920)
– Non-controlling interests
536
424
465
Profit/(loss) for
the financial year
2,624
536
(455)
Earnings/(loss) per share
From continuin
g operations
– Basic
8
7.20c
0.38c
(3.13)c
– Diluted
8
7.17c
0.38c
(3.13)c
Total Group
– Basic
8
7.20c
0.38c
(3.13)c
– Diluted
8
7.17c
0.38c
(3.13)c
Consolidated stat
ement of comprehensive i
ncome
for the years ended 31 March
2022
2021
2020
Note
€m
€m
€m
Profit/(loss) for
the financial year
2,624
536
(455)
Other comprehensive income/(expense):
Items that may be reclassified to t
he income statement in subsequent years:
Foreign exchange translation
differences, net of tax
(25)
133
(982)
Foreign exchange translation differenc
es transferred to the inc
ome statement
19
(17)
(36)
Other, net of tax
1
1,863
(3,743)
3,066
Total i
tems that may b
e reclassified t
o the incom
e statement in
subsequent
years
1,857
(3,627)
2,048
Items that will not be reclassified to th
e income statement in
subsequent years:
Net actuarial gains/(losses
) on defined benefit p
ension schemes,
net of tax
25
483
(555)
526
Total i
tems that will n
ot be reclassifi
ed to the inc
ome statem
ent in
subseq
uent year
s
483
(555)
526
Other comprehensive
income/(expense)
2,340
(4,182)
2,574
Total comprehensive
income/(expense) fo
r the financial year
4,964
(3,646)
2,119
Attributable to:
– Owners of the parent
4,402
(4,069)
1,696
– Non-controlling interests
562
423
423
4,964
(3,646)
2,119
Note:
1
Principally in
cludes the impa
ct of the Group’
s cash flow hedges defe
rred to othe
r comprehe
nsive income
du
ring the ye
ar.
Further details on items in the consolidated
statement of comprehensive inco
me can be
found i
n the consol
idated statement of ch
anges in equity on page 131.
Strategic report
Governance
Financials
Other information
129
Vodafone Group Plc
Annual Report 2022
Consolidated stat
ement of
financial position
at 31 March
31 March 2022
31 March
2021
Note
€m
€m
Non-curren
t assets
Goodwill
10
31,884
31,731
Other intangible assets
10
21,360
21,818
Property, plant and equipment
11
40,804
41,243
Investments in associates and joint ventures
12
4,268
4,670
Other investments
13
1,073
925
Deferred tax assets
6
19,089
21,569
Post employment benefits
25
555
60
Trade and other receivables
14
6,383
4,777
125,416
126,793
Current
assets
Inventory
836
676
Taxation recoverable
296
434
Trade and other receivables
14
11,019
10,923
Other investments
13
7,931
9,159
Cash and cash equivalents
19
7,496
5,821
27,578
27,013
Assets held for sale
7
959
1,257
Total a
ssets
153,953
155,063
Equity
Called up share capital
17
4,797
4,797
Additional paid-in capital
149,018
150,812
Treasury shares
(7,278)
(6,172)
Accumulated losses
(122,118)
(121,587)
Accumulated other comprehensive income
30,268
27,954
Total attributable to owners of the
parent
54,687
55,804
Non-controlling interests
2,290
2,012
Total equity
56,977
57,816
Non-curre
nt liabilities
Borrowings
21
58,131
59,272
Deferred tax liabilities
6
520
2,095
Post employment benefits
25
281
513
Provisions
16
1,881
1,747
Trade and other payables
15
2,516
4,909
63,329
68,536
Current l
iabilities
Borrowings
21
11,961
8,488
Financial liabilities und
er put option arrangements
22
494
492
Taxation liabilities
864
769
Provisions
16
667
892
Trade and other payables
15
19,661
18,070
33,647
28,711
Total equity an
d liabilitie
s
153,953
155,063
The
consolida
ted fina
ncial stat
ements
on pages
129 to 2
14 were
approved b
y the B
oard of
Direct
ors and au
thorised
for issu
e on 17
May 2022
a
n
dw
e
r
es
i
g
n
e
d
o
ni
t
sb
e
h
a
l
fb
y
:
Nick
Read
Marg
herit
a De
lla
Vall
e
Chief
Ex
ecutive
Chief F
inancial
Officer
M
Strategic report
Governance
Financials
Other information
130
Vodafone Group Plc
Annual Report 2022
Consolidated stat
ement of changes in equity
for the years ended 31 March
Additional
Accumu
late
d other comprehensive income
Equity
Non-
Share
paid-
in
Treasury
Accumulated
Currency
Pensions
Revaluation
attributable
controlling
Total
capital
1
capital
2
shares
losses
reserve
3
reserve
surplus
4
Other
5
to
owners
interests
equity
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
1 April 2019
4,796
152,503
(7,875)
(116,986)
29,284
(1,205)
1,227
213
61,957
1,231
63,188
Issue or reissue of shares
1
1
73
(68)
–
–
–
–
7
–
7
Share-based payments
–
125
–
–
–
–
–
–
125
11
136
Transactions with NCI in
subsidiaries
–
–
–
(58)
–
–
–
–
(58)
(102)
(160)
Dividends
–
–
–
(2,317)
–
–
–
–
(2,317)
(348)
(2,665)
Comprehensive
(expense)/income
–
–
–
(920)
(976)
526
–
3,066
1,696
423
2,119
(Loss)/profit
–
–
–
(920)
–
–
–
–
(920)
465
(455)
OCI - before tax
–
–
–
–
(951)
640
–
3,771
3,460
(46)
3,414
OCI - taxes
–
–
–
–
19
(114)
–
(705)
(800)
(4)
(804)
Transfer to the income
statement
–
–
–
–
(44)
–
–
–
(44)
8
(36)
31 March 2020
4,797
152,629
(7,802)
(120,349)
28,308
(679)
1,227
3,279
61,410
1,215
62,625
Issue or reissue of shares
6
–
(1,943)
2,033
(87)
–
–
–
–
3
–
3
Share-based payments
–
126
–
–
–
–
–
–
126
10
136
Transactions with NCI in
subsidiaries
7
–
–
–
1,149
–
–
–
–
1,149
748
1,897
Dividends
–
–
–
(2,412)
–
–
–
–
(2,412)
(384)
(2,796)
Comprehensive
income/(expense)
–
–
–
112
117
(555)
–
(3,743)
(4,069)
423
(3,646)
Profit
–
–
–
112
–
–
–
–
112
424
536
OCI - before tax
–
–
–
–
124
(686)
–
(4,630)
(5,192)
–
(5,192)
OCI - taxes
–
–
–
–
6
131
–
887
1,024
3
1,027
Transfer to the income
statement
–
–
–
–
(13)
–
–
–
(13)
(4)
(17)
Purchase of treasury
shares
8
–
–
(403)
–
–
–
–
–
(403)
–
(403)
31 March 2021
4,797
150,812
(6,172)
(121,587)
28,425
(1,234)
1,227
(464)
55,804
2,012
57,816
Issue or reissue of shares
6
–
(1,902)
2,000
(98)
–
–
–
–
–
–
–
Share-based payments
–
108
–
–
–
–
–
–
108
11
119
Transactions with NCI in
subsidiaries
7
–
–
–
(38)
–
–
–
–
(38)
237
199
Dividends
–
–
–
(2,483)
–
–
–
–
(2,483)
(532)
(3,015)
Comprehensive
income/(expense)
–
–
–
2,088
(32)
483
–
1,863
4,402
562
4,964
Profit
–
–
–
2,088
–
–
–
–
2,088
536
2,624
OCI - before tax
–
–
–
–
(51)
627
–
2,368
2,944
26
2,970
OCI - taxes
–
–
–
–
–
(144)
–
(505)
(649)
–
(649)
Transfer to the income
statement
–
–
–
–
19
–
–
–
19
–
19
Purchase of treasury
shares
8
–
–
(3,106)
–
–
–
–
–
(3,106)
–
(3,106)
31 March 2022
4,797
149,018
(7,278)
(122,118)
28,393
(751)
1,227
1,399
54,687
2,290
56,977
Notes:
1
See note 17 ‘Called u
p share capital’.
2
Includ
es share prem
ium, capital reserve,
capital re
demption rese
rve, mer
ger reserve and share-
based pa
yment reserve. The merg
er reserve w
as derive
d from acqu
isition
s made
prior to 31 March
2004 and subsequently allocated to additiona
l p
aid-in capital on adoption of IFRS.
3
The c
urrency reserve is
used to record cumula
tive translation
differences on t
he assets and l
iabilities of
foreign operatio
ns
. The cumulati
ve translation diff
erences are recycled to the inco
me
statement on d
isposal of t
he foreign op
eration.
4 The
revaluation
surplus
derives
from acqu
isitions of subsidiaries made
before the Group’
s adoption of IFRS 3 (Revised) on 1 A
pril 2010 and comprise
s the amounts arisin
g from recognising the
Group’s
pre-existing equity int
erest in the acquired subs
idiary at fair value.
5
Principally in
c
lu
des the impact of the Group’s
cash flow hedges
with €3,704 mill
ion net gain
d
eferred to other comp
rehensive
income d
uring the yea
r (2021: €5,892 million net l
oss; 2020: €4,113
million net
gain) and €1,422 milli
on net gain (202
1: €1,226 million net
loss; 2020: €408 million
net gain) recyc
led to the inco
me
statement. These h
edges primarily re
late to foreign e
xchange
exposure on
fixed borrowing
s, with any
foreign exchan
ge on nominal bal
ances directly im
pacting income stat
ement in each period bu
t interest cash flows
unwinding to t
he income statement
over the life of t
he hedges (up to 2059).
See note 22 ‘Capita
l and financial r
isk management’ for fu
rther details.
6 Movements inc
lude the re-issue of 1,427
million shares
(€
1,944 million) in
March 2021 to satisf
y the first tranc
he and

the re-issue
of 1,519 milli
on shares (€1,903 mill
ion) in Marc
h 2022
to sa
tisfy the seco
nd tranche of
the Mandator
y Convertible Bond
issued in March
2019.
7
Princ
ipally relates
to the IPO o
f Vantage T
owers A.G.
See note
27 ‘Acquisi
tions and di
sposals’ for d
etails.
8
Represents the irrevocable and non-discretionary share buyback
programmes annou
nced on 19 March 2021, 19
May 2021, 23 July 20
21, 17
November 2021 and 9 Marc
h 2022.
Strategic report
Governance
Financials
Other information
131
Vodafone Group Plc
Annual Report 2022
Consolidated stat
ement of cash flows
for the years ended 31 March
2022
2021
2020
Note
€m
€m
€m
Inflow from operating act
ivities
18
18,081
17,215
17,379
Cash flows from inve
sting activities
Purchase of interests in subsidi
aries, net of cash acquired
27
–
(136)
(10,295)
Purchase of interests in as
sociates and joint ventures
12
(445)
(13)
(1,424)
Purchase of intangible assets
(3,262)
(3,227)
(2,423)
Purchase of property
, plant and equipment
(5,798)
(5,413)
(5,182)
Purchase of investments
(2,009)
(3,726)
(1,832)
Disposal of interests in subsidia
ries, net of ca
sh disposed
27
–
157
4,427
Disposal of interests in as
sociates and joint ventures
446
420
–
Disposal of property, plant a
nd equip
ment and intangible assets
33
43
61
Disposal of investments
3,282
1,704
7,792
Dividends received from associates and joint ventures
638
628
417
Interest received
247
301
371
Outflow from investing activities
(6,868)
(9,262)
(8,088)
Cash flows from fi
nancing activities
Proceeds from issue of long-term
borrowings
2,548
4,359
9,933
Repayment of borrowings
(8,248)
(12,237)
(16,028)
Net movement in short-term
borrowings
3,002
(2,791)
2,488
Net movement in derivatives
(293)
279
98
Interest paid
1
(1,804)
(2,152)
(2,284)
Payments for settlement
of writte
n put options
2
–
(1,482)
–
Purchase of treasury shares
(2,087)
(62)
(821)
Issue of ordinary share capital
and reissue of treasury shares
17
–
5
7
Equity dividends paid
9
(2,474)
(2,427)
(2,296)
Dividends paid to non-controlling
shareholders in subsidiaries
(539)
(391)
(348)
Other transactions with non-contr
olling
shareholders in subsidiaries
27
189
1,663
(160)
Other movements with associates and joint ventures
–
40
59
Outflow from financing activit
ies
(9,706)
(15,196)
(9,352)
Net cash inflow/(outfl
ow)
1,507
(7,243)
(61)
Cash and cash equivalents at beginning of the financial year
19
5,790
13,288
13,605
Exchange gain/(loss)
on cash and cash equivalents
74
(255)
(256)
Cash and cash equi
valents at end of the financial year
19
7,371
5,790
13,288
Notes:
1
Amount for 2022 includ
es €58 million (2021: €9
million in
flow; 2020: €273 milli
on outflow) of cas
h inflow on deri
vative financi
a
l instrument
s for the sha
re buyback related t
o maturing tra
nches of
mandatory c
onvertible bond
s.
2
Amount for 2021 reflects
the settlement of a
tender offer made
t
o other sharehold
ers of Kabel Deutsch
land Holding A.G.
Strategic report
Governance
Financials
Other information
132
Vodafone Group Plc
Annual Report 2022
1. Basi
s of p
repara
tion
This sec
tion describes the critical ac
counting judgemen
ts an
d estimates that ma
nagement ha
s identified as
having
a potenti
ally m
aterial i
mpact o
n the Grou
p’s
consolidated financial statements and se
ts
out our
sig
nificant
accou
nting p
olicies t
hat re
late to th
e fina
ncial st
ateme
nts as a w
hole.
Where an
account
ing
policy i
s gener
ally appli
cable t
o a specific
note to th
e financi
al statem
ents, the poli
cy is descr
ibed withi
n
that
note. We
have also d
etai
led below t
he new a
ccounti
ng pronou
nceme
nts that we w
ill ad
opt in fut
ure
years an
d our current view of
the impact they
will have on o
ur financial rep
orting.
The consolidate
d financial stateme
nts are prepared in accord
ance
with UK-adopted In
ternational Accounting Stan
dards (‘IAS’), wi
th
International Fin
ancial Reporting Standard
s (‘IFRS’) as issued by the Int
ernational Accounting Stand
ards Board (‘IASB’) and wit
h the require
ments
of the Companies A
ct 2006 (the ‘A
ct’). The con
solidated financial
statements are pre
pared on a
going concern basis (see page 1
1
8).
Vodafon
e Group Pl
c is inco
rporated
and domicil
ed in En
gland an
d Wale
s (registra
tion number
183367
9). The regist
ered addre
ss of
the
Company is Vo
dafone Ho
use, The Connect
ion, New
bury, Berksh
ire, RG14 2FN
, Englan
d.
IFRS requ
ires the Dire
ctors to a
dopt accounti
ng policie
s that are the
most appro
priate to th
e
Grou
p’s circ
umstance
s. These h
ave been ap
plied
consisten
tly to al
l the year
s present
ed, unles
s otherwis
e stated. I
n deter
mining
and applyi
ng accoun
ting polici
es, Dire
ctors an
d management
are requir
ed to make jud
gements and estim
ates in respect o
f it
ems where the
choice of specific
policy,
account
ing judg
ement
, es
ti
mate o
r
assumption to be followed could materially affect the Group’s reported financial position, results or cash flows and disclosure
of contingent
assets or l
iabilities du
ring the reporting per
iod; it may later
be
determined th
at a different choic
e may have been mor
e approp
ri
ate
.
The Group’s crit
ical accoun
ting judgements and key
sources of estimatio
n
unc
ertainty are deta
iled below.
Actual outcomes could
differ from
those estimate
s. The estimate
s and underlyin
g assumptions are r
evi
ewed on
an ongoin
g basis. Re
visions t
o accountin
g estimates
a
re
recognis
ed in the per
iod in whi
ch the estima
te is revis
ed if the revi
sion af
fects only th
at perio
d; they are rec
ognised
in the
period of
the revision
and future perio
ds if the revi
sion affects both curren
t and future period
s.
Managem
ent regularl
y reviews, and
revises as necess
ary, the accountin
g judgements that sign
ifican
tly impact the amoun
ts recogni
sed in the
financial st
atements and the e
stimates that ar
e considered to
be ‘cr
itical estimate
s’ due to their potent
ial to give rise
to mat
erial adju
stments in
the Group’s fin
ancial state
ments in the year to
31 March 2023
. As
at 31 March 20
22, management has id
entified critic
al
ju
dgemen
ts i
n resp
ect
of reven
ue reco
gnition
, lease ac
counting
, valuin
g assets an
d liab
ilities a
cquired in
busines
s combin
ations
, the accoun
ting for
tax disputes in
India, the clas
sification of joint arr
angements
,
whether to reco
gn
ise
provisions or to
disclo
se contin
gent liabilitie
s and the
im
pacts of
climate
change
. In add
ition, man
agement h
as identif
ied crit
ical accou
nting e
stimates in r
elatio
n to the reco
very of
deferred tax
asset
s
, post empl
oyment
benefits and im
pairment reviews; es
timates ha
ve al
so been i
dentified th
at are not con
sidered to
be critic
al in resp
ect of the a
llocation of
revenue
to goods
and servic
es, the useful
economi
c lives of fin
ite live
d intangi
bles and pro
perty,
plant an
d equipmen
t.
The majority
of the Group’s
provisions are
either long-
term in na
ture (s
uch as asset retiremen
t obligations) or relate
to short
er-term liabil
ities
(such as those relat
ing to restruct
uring and pro
perty) where there is not cons
idered to be a signifi
cant risk of material ad
jus
tment in the next
financi
al year. Criti
cal judge
ments exerci
sed in respect of
tax
dis
putes in India,
include the c
ases relatin
g to our acqui
sitio
n of Hutch
ison Essar
Limited (Vodafone Ind
ia).
These critical ac
counting judgements, est
ima
tes and related disclo
sures have been disc
ussed
with the Group’s Audi
t and Risk Com
mi
ttee.
Critical
account
ing judg
ements
and ke
y sourc
es of e
stimation
uncertai
nty
Revenue re
cognition
Revenue recognition under IFR
S 15 necessitates the collation and
processing of very large amounts of data and the use of manage
ment
judgements
and estima
tes to produ
ce financial
information
. The most
signifi
cant account
ing judge
ments an
d source of es
timation
uncertainty
are disclosed below.
Gross versus net presentation
If the Group has control of goods or
services when they are de
l
ivered to
a customer, th
en the Group
is the prin
cipal in the sal
e to the custo
mer;
otherwise the Group is acting as a
n agent. Whether the Group is
cons
idered to be
the principa
l or an agent in
the transac
tion d
epends on
analysis by managem
ent of both
the legal form a
nd substan
ce
of
the agreem
ent between the Group
an
d its busine
ss partner
s; such
judgements imp
act
the amoun
t of
reporte
d
re
venue
and operatin
g expenses (see not
e 2 ‘R
evenue disag
gregation and segmental analy
sis’) but
do not imp
act repor
ted assets, l
iabilitie
s or cash flo
ws. Scenar
ios requiri
ng judgement to
determine wh
ether the Group i
s a pri
n
cipal or an
agent
inclu
de, for exam
ple, tho
se where th
e Group
deliver
s third-
party br
anded soft
ware or ser
vices (su
ch as pre
mium music, TV
content or
cloud-
based services) to customers and good or services deli
vere
d to custom
ers in partne
rshi
p with a third-party.
Notes to the consolidated financial statements
Strategic report
Governance
Financials
Other information
133
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
1. Basis of pr
eparation (continued)
Allocation of reve
nue to goods and serv
ices provided to cust
omers
Revenue is reco
gnised when goo
ds and servic
es are deli
vered to customers (see note
2 ‘Revenue disaggre
gation an
d segmental anal
ysis’). Goods
and services may be del
ivered to a customer at different times un
der the
same contract, h
ence it is necess
ary to allocate
the a
mount payable by
the customer between goods and se
rvices on a ‘relat
ive standalone selling pri
ce
bas
is’; this requires the identificatio
n of per
formance ob
ligations
(‘obligations’) and the determina
tion of standalone selling prices for the identif
ied obligations. The d
eterminati
on of obliga
t
ions is, for the primary
goods and serv
ices sold by th
e Group, not consider
ed to be a crit
ical accoun
ting judgement; the Group’
s policy o
n identifying o
bl
igations is
disclosed in note 2 ‘Revenue disaggregation and segmental analys
is’. The determination of stan
dalone selling prices for identif
ied obligations i
s
discussed bel
ow.
It is necessary to estimate the standalone pr
ice when the Group
does not sell equivalent g
oods or services in simila
r circumsta
nces on a st
andalone
basis. When estimatin
g the standalone pric
e the Group maximises the use of external in
puts; methods for esti
mating standalon
e p
rices include
determining the standalone price of si
milar goods and services
sold by the Group, observing the stan
dalone
prices for
similar goods and services
when sold by
third parties o
r using a cost-pl
us reasonabl
e margin
appro
ach (which is somet
imes the case for
devices and other e
quipment). Where
it is not p
ossible to reliably es
timate standalone
prices due to a la
ck of observab
le standalone sales
or highly variable p
rici
ng, which is sometimes t
he
case for services, the standalone price of an
obligation may be determine
d as the tran
saction price less the standalone prices
of other obligati
ons in
the contract. The standa
lone price
determined for obligati
ons m
aterially impacts the allocatio
n of revenue be
tween obligations
and impacts the
timing of rev
enue when obligations are pr
ovided to customers a
t different times – for exam
ple, the allocation of revenue b
etwee
n devices, wh
ich are
usually delivered up-front, a
nd ser
vices wh
ich are typically
delivered over th
e contract period. Ho
wever, there is no
t consider
ed to be a significant
risk of material adjustment to the carrying value of contract-rela
ted asset
s or liab
ilities in
the 12 months after the balance
sheet date if these
estimates were revised.
Lease accounting
Lease ac
counting under IFRS 16 is complex and
necessitates the collati
o
n and
processing of very larg
e amounts of data and
the i
ncreased use
of
management judgements and est
imates to pr
oduce
financial informa
tion. The most significa
nt accounting judgements
are disclosed
below.
Lease identification
Whether the arrangement
is consider
ed a lease or a service con
tract depends o
n the analysis by mana
gement of bo
th the legal fo
r
m and substance
of the arrangement betw
een the Group and the counter-party
to determine if control of an iden
tified asset has
been passed betwe
en the partie
s; if
not, the arrangement is a service arrangem
ent. Control exists if the Group obtains
substanti
ally all of the economi
c benefit fr
om the use of the asset,
and has the ability to direct its us
e, for a period of time. An identifie
d asset exists where an
agreement explicitly
or implic
itly identifies an asset or a
physicall
y distinct port
ion of an asset
which the
lessor has no substantiv
e right to substitute.
The scenarios requiring th
e greatest judgement include those where the arrang
ement is for the use of fibre or other fixed
telec
ommunication lines.
Generally, where the Group has exclusive us
e of a physical line it is determined that
the Group can also
direct the use of the
line and therefore leases
will be reco
gnised. Where the Gr
oup provides
access to fibre o
r other
fixed telecommu
nication lines to another operat
or on a wholesale ba
sis the
arrangement wil
l generally be iden
tified as a lease, wh
ereas when
the Group provides fixed line se
rvices to an end-user, genera
lly control over suc
h
lines is not passed to
the end-user and a lease is not identifie
d.
The impact of determining whether an agreement is a lease or a
service
depends on whether the
Group is a potential lessee or le
ssor in the
arrangement and, where the Group is a lessor,
whether the arrangement is class
ified as
a
n operating or finance lea
se. The impac
ts for each scenari
o
are described
below where
the Group is potentially:
-
A lessee. The judg
ement impa
cts the nature and timing of both cost
s and r
eported assets and lia
bil
ities. A l
ease results in an
asset and a lia
bility
being reported
and depreci
ation
and interest being re
cognised; the
interest charge will decrease over the life of the lease. A
service contract
results in o
perating expenses bein
g recognised e
venly over the l
ife of the contract and no as
sets or liabili
ties being recorded
(other than trade
payables
, prepayment
s and accrual
s).
-
An operating lessor. Th
e judgement impact
s the nature of inco
me recognised. An o
perating lease
results in l
ease income bein
g recognised wh
ilst
a service contract results in service revenue. Both
are recognised evenly over the life of the contract.
-
A finance lessor. The judgement impacts the
nature an
d timing of bo
th income and repo
rted assets. A finance lease results in th
e lease income
being recognised at commencement of the lease and an asset (the net investment in the lease) being recorded.
Lease term
Where leases include addit
ional option
al pe
riods after an initial lease ter
m, signific
ant judgement is require
d in determining
whether these optional
periods shoul
d be included when de
termini
ng the lease term. The impact of this judg
ement is significantly
gr
eater where the Gro
up is a lessee. As a
lessee, optional periods are included
in
the lease term if the Group
is
reas
onably certain
it will exercise
an extension option
o
r will not exercise a
termination optio
n; this depends on
an analysis by
management of al
l relevant f
acts and circumst
ances inclu
ding the leased asse
t’s n
ature and
purpose, the e
conomic and pr
actical po
tential for replacin
g the asset and any
plans that the Group h
as in place fo
r the future
use of the asset. Where
a leased asset is hi
ghly custo
mised
(either when initially
provided or
as a result of leasehold
improvements) or it i
s impractical or uneconom
ic to
replace then the Group is more li
kely to judge that lease extension options are
reaso
nably certain to be ex
ercised. The value o
f the right-of-use asset
and lease lia
bility will be gre
ater when exten
sion options are inclu
ded in the lease term. The n
ormal approach
adopted for le
as
e term by asset class
is described
below.
Strategic report
Governance
Financials
Other information
134
Vodafone Group Plc
Annual Report 2022
The lease terms can v
ary significan
tly by type an
d use of asset and geograph
y. In addition, th
e exact lease ter
m is subject to
the non
-cancellable
period and rights and options in eac
h contract. Generally, leas
e terms are judged to be the longer of the minimum lease term an
d:
-
Between 5 and 10 years f
or land and bu
ildings (exclud
ing retail),
with terms at the top end of th
is range if the lease relates
to assets that are
considered
to be difficult to exit s
ooner for economic,
practical or repu
tational reasons;
-
To the next contractual lease break
date for retail premises
(excluding breaks within the next 12 months);
-
Where leases are used to provide internal
connectivity the lease term for the connect
ivity is al
igned to the lease term or usef
ul economic
life of
the assets connected;
-
The cus
tomer service agreement length for leas
es of local loop c
o
nnections or other assets req
uired to provide fixed li
ne servi
ces to individual
customers; and
-
Where there are contractual agreements to provide services usin
g leased assets
, the lease term
for these assets is genera
lly se
t in ac
cordance
with the above principles or for the lease term required to provide
the services for the agreed
servi
ce p
eriod, i
f longer.
In most instances the Group has options to
renew or extend leases for additional pe
riods after the end of the lease term which
are assessed using
the criteria above.
Lease terms are reasse
ssed if a signif
icant event or chan
ge in circumst
ances occurs relat
ing to the leased a
ssets that is withi
n the control of the
Group; such ch
anges usually r
elate to comme
rcial agreements entered into by the Group,
or business decisio
ns made by the Group.
Where such
changes ch
ange the Group’s
assessment of
whether it is reasonabl
y ce
rtain to exercise options to
extend, or not terminate lease
s, then the lease
term is reassessed an
d the lease liability is remeasured, whic
h in most
cases will increa
se the lease liability.
Taxation
The Grou
p’s tax char
ge on ord
inary activ
ities is the
sum of the tot
al current an
d deferred
tax charge
s. The cal
culation of th
e
Group’s total t
ax
charge invo
lves estima
tion and judgement in
re
spect of cert
ain matters,
being prin
cipally
:
Recognition of
deferred tax assets
Signifi
cant items o
n which the
Group ha
s exercised
account
ing estim
ation and jud
gement includ
e the reco
gnition of
deferred tax
assets in
respect of lo
sses in
Luxembourg,
Germany, It
aly and Spain
as well as capital allowances in the United Kingdom. The recognition of deferred tax
assets,
particularl
y in respe
ct of tax losses
, is based u
pon whet
her mana
gement judg
e that it is prob
able that there
will be su
ffic
ient and suitable
taxable profits in th
e relevant legal
entity or tax group agains
t which to utilise the assets in the future. The Group assesses
the availab
ility of
future taxable profits u
sing the s
ame undiscounted five ye
ar forec
asts for the Grou
p’s operations a
s are used in the Grou
p’s va
lue in use
calculat
ions (see note 4 ‘Imp
airment losses’). In
the case of Lu
xembour
g,
this includes forecas
ts of future income from the Gro
up’s i
nte
rna
l
finan
cing, central
ised procur
ement and roami
ng activit
ies.
Where tax losses are forecast to be recovered beyond the five year period, the availability of taxable profits is assessed usin
g the cash flows and
long-term growth r
ates used for the valu
e in use calculations
.
The estimated cash flows inherent i
n these forecasts include the unsystemati
c risks
of o
perating in the telecommunications busi
ness inc
luding
the potential impact
s
of chan
ges in the
market stru
cture, trends
in cust
omer pricing, the costs as
sociated with the acqu
isition
an
d retention of
customers, future technological evolutions and potential regul
atory cha
nges,
such a
s our abil
ity to acqui
re and/or re
new spe
ctrum licenc
es.
Changes in the estimates whi
ch
un
derpin the
Group’s forecasts could have an impact on
the amount of future taxable p
rofits and
co
uld hav
e a
signifi
cant imp
act on the perio
d over whi
ch the defer
red tax asse
t would be r
ecovere
d.
The Group only considers substantively enacted tax laws when a
ssessing the amount and availability of tax loss
es to offset agai
nst
the
futur
e
taxable profits. S
ee note 6 ‘Taxation’
to the consolidated financial
statements.
See additional co
mmentary relatin
g to
cl
imate change on page 15
8.
Uncertain t
ax positions
The tax impact of a
transaction or it
em can be uncertain until
a
conclusion is r
eached with the relev
ant tax authority or throu
gh a lega
l process.
The Group uses in-hou
se tax experts when assessin
g uncertain tax
positions and seeks the advice of external professional adviso
rs w
here
appropri
ate. The most s
ignifican
t judgement
in this area r
elate
s to
th
e Group’s tax dispu
tes in India, includi
ng the cases rela
ting
to th
e Grou
p’s
acquisit
ion of Hutch
ison Essar
Limited (Vod
afone India
). Further de
t
ails of the tax dispute
s in India are in
cluded in note 29 ‘
Contin
gent liabil
ities
and legal pro
ceedings’ to t
he consol
idated financial st
atements.
Business combinations and
goodwill
When the Group completes a business combination, the fair values
of the identifiable assets and
lia
bilities acquired, including
i
ntang
ible
ass
ets,
are
recognised. The determination of the fair va
lues of acquired ass
ets and liabilities is
based, to a considerable extent, on mana
gement’s judgement. I
f
the purchase consideration
exceeds the fair value of the net a
ssets acquired then the incrementa
l amount pa
id is recogn
ised as
goodwill. If the
purchase
pri
ce consideration is lower than the fai
r value of the
assets acquired then the differe
nce is r
ecorded as a gain
in t
he income statement.
Allocation of the p
urchase pric
e bet
ween
finite lived assets
(discussed below) and i
ndefinite lived as
sets such as goodwi
ll aff
ects the subsequent
results of the Group as
finite lived intangible a
ssets are amortised, w
here
as inde
finite lived intangible a
ssets, including goo
dw
ill, are not amorti
sed.
See note 27 ‘Acquisitions and d
isposals’ to the cons
olidated financi
al statemen
ts for further details.
Strategic report
Governance
Financials
Other information
135
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
1. Basis of pr
eparation (continued)
Joint arrangements
The Group participates in a number of joint a
rrangements where control of
the arrangement is shared wi
th one or more other part
ies. Judgement is
required to classify joint arrangements in
a separate legal entity as either a join
t operation or as a joint
venture, which dep
ends on management’s
assessment of
the legal form an
d substance of the arran
gement taking into
account relevant f
acts and circu
mstances such as whet
her the owners
have rights to substa
ntially all the economic
outputs and, in substance
, s
ettle the liabilities of the entity.
The classifi
cation can have a materia
l impact on the conso
lidated financi
al statements. The Group’
s share of assets, l
iabilitie
s
, revenue, expenses and
cash flows o
f joint operation
s are included in the co
nsolidated fi
n
ancial statements on a line-by-line basis, whereas the Group
’s investment and
share of results of joi
nt ventures are shown wi
thin single line
items in the consolidated statem
ent of financi
al position and c
ons
olidated inc
ome
statement respectively. See note 12 ‘Investments in a
ssociates
and joint a
rrang
ements’ to the consolidated financial statements
.
Finite lived intangible assets
Other intangible asset
s include amounts sp
ent by the Group acquiring lic
ences and sp
ectrum, customer bases and the costs of pur
chasing an
d
developi
ng computer
softwa
re.
Where intangible assets are acquired
throug
h busine
ss combinat
ions and no
active market
for the assets exists, the fair value o
f these assets is
determined by discounting estimated future net cash flows genera
ted
by the asset.
Estimates relating to the future cash flows a
nd discount rates
used may have a material effect on the repor
ted amounts of fi
nite lived intangible as
sets.
Estimation of useful li
fe
The useful life over which in
tangible assets are amortised depe
nds on management’s
estimate of th
e period o
ver which economic b
enefit will be
derived from the asset
. Useful lives are peri
odically reviewed to
ensure that they remain approp
riate. Management’s estimates o
f useful life have a
material impact on the amount of amortisati
on recor
ded in the year, but
there is not con
sidered to be a signif
icant risk o
f mat
erial adjustment to th
e
carrying values of intangible ass
ets in the year to 31 March 2023 if these estima
tes were revise
d. The
basis for determining th
e useful life for the
most significant c
ategories of intang
i
ble assets are
dis
cussed below.
Customer bases
The estimated
useful life principally r
eflects manag
ement’s view of the averag
e economic life of the cu
stomer base and is asses
sed
by reference to
customer churn rates. An
increase in churn rates may lead to a reduction in the estimated
useful life and an increase in the amortisation charge.
Capitalised so
ftware
For computer software, the estima
ted usef
ul life is based on mana
gement’s view, co
nsidering histori
cal experience with
similar
product
s as well as
anticipati
on of future events which may imp
act their life such as cha
nges in technology. The useful life w
ill not exceed the du
ration of a licenc
e.
Property, plant and equipm
ent
Property, pl
ant and equipment re
presents 26.
5% of the Group’s to
tal assets (2021: 2
6.6
%). Estimates and
assumptions made may
ha
v
e a ma
terial
impact on their
carrying value
and related depre
ciation charge
. See note 11 ‘Proper
ty, plant and equi
pment’ to the co
nsolidated
financial
statements for f
urther details.
Estimation of useful li
fe
The depreciatio
n charge fo
r an asset is de
rive
d using estimates of its expected useful
life and expected residual value, which are reviewed annually.
Management’s
estimate
s of useful life ha
ve
a material imp
act on the amou
nt of deprecia
tion recorded in the year, but there is n
ot considered to be
a significant ri
sk of material adjustme
nt to
the carrying values of proper
ty, plant and equi
pm
ent in the year to 31 March 2023
if these estimates wer
e
revised.
Management
determines the useful lives and re
sidual v
alues for assets when they are acquired,
based on experience wi
th similar assets and
taki
ng
into account other relevant
factors such as any expec
ted changes in tec
hnology.
See additional commentary
relating
to climate change, below.
Post empl
oym
e
nt
be
nefits
Management uses estimates when
determining the Group’s liabilities an
d expenses
arising for defined benefit pension schemes. Ma
nag
e
ment is
required to estimate the future rates of in
flation,
salary increa
ses, discount rates and long
evity of members, each of w
hich ma
y have a
material
impact on the def
ined benefit oblig
ations that are reco
rded. Further detai
ls, includin
g a sensitivity an
alysis, are in
cluded in
note 25 ‘Post employment
benefits’ to the consolida
ted financial statements.
Contingent liabil
ities
The Group exercises judgement to determine
whether to recognise provisio
ns and the exposure
s to contingent liabilitie
s related
to pending
litigations or other outstanding claims subj
ect to negotiated settlement, mediation
, ar
bitration or government regulation, as w
ell as other contingent
liabili
ties (see note 29 ‘Contingent liabi
lities and legal p
roc
eedings’ to the consolidated fina
ncial st
atements). Judgement is
necessary to asse
ss the
likeliho
od that a pending clai
m will su
cceed, or a liabil
ity will arise.
Impairment reviews
IFRS requires management to perform im
p
airment tests annually for ind
efinite
lived assets
, for finite lived ass
ets and for equity acco
unted
investments, if even
ts or changes in
circumstances
indicate that their
carryin
g amounts may not be r
ecoverable.
Strategic report
Governance
Financials
Other information
136
Vodafone Group Plc
Annual Report 2022
A lack
of observab
le market da
ta on fair
v
alues for equ
ivalent ass
ets mean
s that the
Group’s valua
tion approac
h for impairm
ent
testing focus
es
primar
ily on val
ue in use
. For a num
ber of reasons
, tran
saction va
lues agreed a
s part of any bu
siness ac
quisition or
disposal
m
ay be higher tha
n
the assesse
d value in use
. Where the Group h
as interest
s in list
e
d
ent
ities, market data
,
su
ch as share price,
is used to asses
s the f
air valu
e of
those interests
.
For oper
ations that ar
e classif
ied as
held for sal
e, managemen
t is requ
ired to de
termine whether
the carry
ing value of
the disc
ontin
ued
operation
can be supported by the fair value l
ess costs to sell.
Where no
t
obser
vable in a quoted market, man
agement has determ
ine
d fair
value less costs to sell by reference to the outco
mes from the application of a number of potential valuation techniques, deter
mined from
inputs other than quoted prices that are observable for the asset or li
ability, either directly or indirectly.
Impairment testi
ng requires management to judge whether the ca
rry
ing value of
asse
ts can be supported by the
net present valu
e
of future
cash flows that they
generate. Calc
ulating the net p
resent value of the future cash flows
requi
res
estima
tes to be made in
respect of highl
y
uncertain matters in
cluding man
agement’s expectation
s of:

Growth in adjuste
d EBITDAaL, cal
culated as ad
justed operatin
g profit b
efore depreci
ation and amort
isation;

Timing and amount of future capit
al expenditure, licen
ce and spectrum paym
ents;

Long-te
rm grow
th rates
; and

Appropriate discount ra
tes to reflect the risks in
volved.
A long-term growth rate
into perpetuity has be
en determined as
the lower of:

The nominal GD
P growth rates f
or
the country of operation; and

The long-term compou
nd annual growth rate in adjusted EBIT
DAaL in years six
to
ten, as esti
mated by manage
ment.
Changin
g the assumption
s select
ed by manage
ment, in parti
cular th
e adj
usted EBITDAa
L and gro
wth rate ass
umptions use
d in the c
a
sh flow
projections, could significantly affect the Group’s impairment evalu
ation and
hence r
eported assets and profits or losses. Furt
her deta
ils,
includin
g a sensit
ivity anal
ysis, are i
ncluded in no
te 4 ‘I
mpairment lo
sses’ to the consol
idated finan
cial stat
ements.
See addition
al commentary rel
ating to clim
ate change
, below.
Climate change
The poten
tial clima
te change-
related r
isks an
d opportun
ities to wh
ich the Grou
p is expos
ed, as identif
ied by man
agement, are
di
sclosed in the
Group’
s TCFD disclosu
res on pages 66 an
d 67.
Managem
ent has assess
ed the potential f
inancial imp
acts relating to the
identified ris
ks, primar
ily
considering the useful lives of, and retirem
ent obligations for,
property, plant and equ
ipment,
the possi
bility of imp
airment o
f goodwill
and other
long-lived assets and the recoverability of the Group’s deferred tax
assets. Management has exercised judgement in concluding t
hat there are
no further material finan
cial impacts of the Group’s climate-rel
ated risks and opportun
ities on the consolidated finan
cial stat
ements. These
judgements
will be kept under r
eview by management
as the future
imp
acts of climate ch
ange depen
d
on environmental, regulatory
and o
ther
factor
s outside of
the Group’s
control whic
h are not al
l currently
known.
Significa
nt accounti
ng policies ap
plied in the
current rep
orting period
that relat
e to the f
inancial
statem
ents as a whole
Accounting convention
The consol
idated f
inancial
statements ar
e prepare
d on a histo
rical co
st basis
except for
certain f
inancial a
nd equity
instrumen
ts that have been
measured at fair val
ue.
Ba
sis
of co
nsol
idat
ion
The consolidated financial statements incorporate the finan
cial statements of the Company, subsidiaries controlled by the Compa
ny (see not
e
31 ‘Related undert
akings’ to the consolidate
d financial statements
)
, joint operatio
ns that are su
bject to joint control and
th
e
results of jo
int
ventures a
nd associ
ates (see
note 12 ‘Invest
ments in associ
ates and joint arr
ang
ements’ to the consol
idated financial
statements).
Foreign currencies
The consolid
ated financial sta
tements are pr
esented in euro
, whic
h is also the Co
mpany’s fun
ctional curre
ncy. Each ent
ity in th
e Group
determine
s its own funct
ional curre
ncy and items
included in the
f
inancial statements of e
ach entity are m
easured using th
at fu
nc
ti
onal
currency.
Transa
ctions in fore
ign curr
encies are in
itially r
ecorded at the
functiona
l currency r
ate prevail
ing at th
e date of the tra
nsac
tion. Monetary assets
and lia
bilities deno
minate
d in foreign curr
encies
are retran
slated into th
e respecti
ve function
al currency o
f the entity
at the
rates prevailing on
the reporting perio
d date. Non-monetary i
tems carried at fair
value that are denominat
ed in foreign currencie
s are retranslated
at
the rates
prevailin
g on the initial
transactio
n dates. Non-mon
etary ite
ms me
asured in terms o
f histor
ical
cost in a foreign curr
ency are
not retranslated
.
Changes
in the fair value o
f monetary secur
ities denomi
nated in
forei
gn curren
cy are an
alysed be
tween tran
slation dif
ference
s a
nd
othe
r
change
s in the car
rying amo
unt of t
he security
. Translatio
n differen
ces ar
e recogn
ised in the
consoli
dated i
ncome stat
ement and
other
change
s in carry
ing amoun
t are rec
ognised
in the conso
lidated sta
tement of
comprehen
sive income
.
Translation diffe
rences on non-monetary
finan
cial assets,
such as inve
stments in equ
ity securitie
s classifi
ed at fair
value through other
comprehensive in
come, are report
ed as part of the fair value gain
o
r loss an
d are in
cluded in the
consoli
dated statemen
t of com
prehensi
ve
income.
Share ca
pital, sh
are pre
mium and oth
er capital r
eserves ar
e initiall
y recorded
at the funct
ional cur
rency r
ate preva
iling at th
e date of the
transa
ction and are not retran
slated.
For the purpo
se of presenting con
solidated f
inancial statement
s,
the assets an
d liabilit
ies of entit
ies with a
functional cu
rre
ncy other than euro
are expres
sed in euro usin
g exchan
ge rates
preva
iling
at the repor
ting
period dat
e.
Strategic report
Governance
Financials
Other information
137
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
1. Basis of pr
eparation (continued)
Income and expense items and cash flows are translated at the aver
age exchang
e rates for e
ac
h
month and exc
h
ange differences ar
isin
g are
recogn
ised dire
ctly in oth
er compr
ehensive
income.
On disposal o
f a f
oreign enti
ty, the cu
mulative a
mount pr
eviousl
y recogni
sed
in the
consolidat
ed statement
of comprehensi
ve income rel
ating to that p
articular fo
reign oper
ation is recog
nised in pro
fit or loss in
the consolidated
income st
atement.
Goodwill and fair value adjustments arising on the acquisition of
a foreign operation a
r
e treated as ass
ets and liabilities of
the foreign operatio
n
and transl
ated ac
cordingly.
The net foreign exch
ange loss re
cognised in
the consolida
ted income statement for the ye
ar ended 31
March 2022 is €3
09 million
(3
1 Ma
rch
2021: €
13 millio
n loss; 2
020: €14
6 million
loss).
The net gain
s and net
losses ar
e recor
ded within o
peratin
g profit (
2022:
€24
million charge;
2021: €3 mill
ion credit; 2
020: €61 millio
n credit)
,
fin
ancin
g
co
sts (2022: €2
84 million
ch
arge; 2021
: €23 million ch
arge; 2020:
€2
05 mil
l
ion
charge)
and in
come tax exp
ense (202
2: €1 mill
ion ch
arge; 20
21: €7 mi
llion cre
dit; 2020:
€2 mill
ion char
ge). The for
eign exch
ang
e gain
s and
losses inclu
ded within other incom
e
and no
n-operat
ing expen
se arise
on th
e dispo
sal of subsidia
ries, intere
sts
in joint ventures, assoc
iates and
investmen
ts from
the recycli
ng of f
oreign ex
change gain
s and los
ses pr
eviously re
cognised
in the conso
lidate
d statement o
f com
p
rehensive
income.
Curren
t or no
n-curr
ent cla
ssific
ation
Assets ar
e classif
ied as cur
rent in th
e consolida
ted statemen
t of financ
ial pos
ition wher
e recovery
is expect
ed within 1
2 month
s of the report
ing
date. All
assets wh
ere reco
very is ex
pected more th
an 12 month
s from the r
eportin
g date and
all deferr
ed tax as
sets, go
odwill a
nd intangible
assets
, property, plan
t and equipmen
t
and inv
estments in asso
ciate
s
an
d
join
t ventures are repor
ted as non-curr
ent.
Liabil
ities are
classifie
d as current u
nless the Grou
p has an un
conditio
nal right to
defer settle
ment of the l
iability f
or at l
east 12 mo
nths after the
reporting da
te. For provi
sions, wher
e the timing of set
tlement is
unce
rtain, amounts are classified as non-c
urrent where settle
men
t is exp
ected
more than 12 months from the
reporting date. In addi
tion, defe
rred tax lia
bilities and post-e
mployment benefits are re
ported as
non-current.
Inventory
Inventory i
s stated
at the lower o
f cost and n
et realisa
ble value
. Cost is
determined on
the basis o
f weight
ed average
costs an
d comprises di
rect
material
s and, whe
re applic
able, di
rect labo
ur costs an
d those over
heads th
at have been
incurre
d in bringi
ng the in
vento
ries to the
ir present
locat
ion and con
dition.
New a
ccounti
ng pronou
nceme
nts adop
ted on
1 April 2
021
The Group adopted the following new accounting policies on 1 April 2021 to comply with amendments to IFRS. The accounting
pronouncements, none of which had a material impact on the Grou
p’s
f
inancial reporting on adoption, are:

Amendments to IFRS 16 ‘
Covid-19-
Related Rent Conce
ssions’ and ‘
Covid-19-Rel
ated Rent Concession
s beyond 30 June
2021’; and

Amendments to IFRS 9, IAS 39, IFR
S 7, IFRS 4 and IFRS 16 ‘Inte
rest Rate Benchmark Reform - Ph
ase 2’.
New a
ccounti
ng pronoun
cement
s and basi
s of pr
eparatio
n chang
es to be a
dopted
on or af
ter 1 Ap
ril
2022
The IASB has issued the following pronouncements for annual periods beginning on or after 1 January 2022:

Annua
l Im
provements to IFRS Stan
dards 2018-2020;

Amendments to IAS 16 ‘Property, Pl
ant and Equipment: Proceed
s before Intended Use’;

Amendments to IAS 37 ‘Onerous C
ontracts - Cost of Fulfilling a Contra
ct’; and

Amendments to IFRS 3 ‘Reference to
the Conceptual Framework’.
These amendment
s
h
ave been endors
ed by the UK En
dorsement Boar
d.
The Gro
up’s fin
ancial
reportin
g wil
l be present
ed in acco
rdance
with
the above n
ew standa
rds from 1 A
pril 2
022. The chan
ges are no
t expec
ted to have a m
aterial
impact on th
e consoli
dated inco
me st
atem
ent,
consolidated statement
of financial position or
consolidated statement of cash
flows.
In addition, it is expected that Turkey will meet the requiremen
ts to be designated as a hyper-inflationary economy under IAS 2
9 ‘Fin
ancial
Reporting in Hyper-Inflationary Economies’ in the quarter to 30
June 2022 and that the Group’s financial reporting relating to
Tur
key during th
e
year ending 31 March 2023 will
be in accordance with IAS 2
9. Under IAS 29, T
urkish Lira results
and non-monetary asset an
d lia
bi
lity balan
ces
are reval
ued to
present
value equiv
alent loc
al curren
cy amount
s (a
djusted base
d on a
n
inflation index) before translation to eu
ros at
reporting-date ex
change rates.
New acco
unting pro
nouncem
ents to be adop
ted on or aft
er 1 April 2023
The following new standards and narrow-scope amendments h
av
e
been issued by the IASB and are effective for annual periods begin
nin
g on or
after 1 January 2023; they
were not endorsed by the EU at 31 December 2
020 and have not yet
been endo
rsed by the UK En
dorsement Boar
d.

IFRS 17 ‘Insurance Contracts’ and A
mendments to IFRS 17 ‘Insur
ance Contracts’;

Amendments to IAS 1 ‘Classifi
cation of Liabilities as
Current or Non-Current’;

Amendments to IAS 1 ‘Disclosure o
f Accounting Policies’;

Amendment to IAS 8 ‘Definition of
Accounting Estimates’;
and

Amendment to IAS 12 ‘Deferr
ed Tax relate
d to Assets an
d Liabilitie
s arisin
g from a Single Tr
ansaction’
.
The Grou
p is asses
sing the im
pact of
these new stan
dards
and the Grou
p’s finan
cial re
porting
will be pr
esented in a
ccordan
ce wi
th these
standa
rds from 1 Apr
il 2023 as app
licable.
Strategic report
Governance
Financials
Other information
138
Vodafone Group Plc
Annual Report 2022
2. Reve
nue disagg
regation a
nd segm
ental anal
ysis
The Grou
p’s businesses ar
e managed on
a geograp
hical basis. Sele
cted fina
ncial dat
a is presented o
n this
basis below
.
Accounting policies
Revenue
When the Group enters into an agreement wi
th a custo
mer, goo
ds and ser
vices deli
verable un
der the co
ntract ar
e identifie
d as se
par
ate
performance obligations (‘o
bligations’) to the extent th
at the cu
stomer
can benefit from the goods or services on their own and
th
at the
separate goods and ser
vices are consid
ered distinct from other
goods and servic
es
in
the agr
eem
ent. Where individu
al goods and
servi
ces do
not meet the criteria to be identifie
d
as separ
ate obligations
they are aggr
egated with other good
s and/or serv
ices in the agr
e
ement until a
separate obligation is identified. The obligations identified will depend on the nature of in
dividual customer contracts, but m
ight ty
pically
be
separately i
dentified for
mobile han
dsets, other equi
pment such a
s set-top box
es and route
rs provide
d to customers an
d service
s
provided
to
customers such as mob
ile and fixed line communicatio
n services.
Where go
ods and ser
vices ha
ve a funct
ional de
pendency (for
exam
pl
e, a fi
xed
line router can only be used with the Group’s services) th
is does not, in isolation, prevent those goods or services from bein
g
assessed a
s
separate obliga
tions
. Ac
tivities
relati
ng to connecting customer
s to the Group’
s network
for the future pro
vision of se
rvices are
not considered
to meet the cr
iteria to
be recogni
sed as obli
gations exce
pt to
the exten
t that the control of re
late
d equ
ipment
passe
s to
c
usto
mers.
The Group det
ermines the tr
ansacti
on price to whi
ch it expect
s to be entitled
in return for pr
oviding th
e promised obl
igations
to the
customer
based on t
he commit
ted contract
ual amount
s, net of sale
s taxes and
discou
nts. Where indire
ct channel
dealers, such
as retailers
, ac
quire
customer con
tracts on
behalf of th
e Group and
receive commi
ssion, any
commissions th
at the deal
er is compel
led to use to
fund d
iscount
s or
other in
centives to th
e customer
are treated
as payments
to the custo
mer when deter
mining the t
ransact
ion price
and conseque
ntl
y are not
included in con
tract acquisit
ion costs.
The transaction price is allocated between the ident
ified obligations according
to the rel
ative standalone selling prices of th
e oblig
ations. The
standalo
ne sellin
g price of e
ach obl
igation deli
verable in
the contr
act is deter
mined acco
rding to th
e prices
that the Grou
p wo
uld a
chieve by
selling the s
ame goods an
d/or service
s included in
the obligation
to a simil
ar customer on a
standalone b
asis; where st
andalone
selling prices
are not directly
observable
, estimation techn
iques are used m
aximising the use
of external inputs
. See ‘Critical
accounting judgements and key
sources of estim
ation uncertainty’ in note
1 for deta
ils. Revenu
e is reco
gnised when
the respe
ctive obli
gation
s in the contr
act
are del
ivered to
the customer and cash collection is considered probable. Revenue for the provision of services, such as mobile airtime an
d fi
xe
d line broadb
and,
is recognise
d when the Group pro
vides the related ser
vice durin
g the agreed service
period.
Revenue fo
r devi
ce sales to
end custo
mers is gen
erally re
cognise
d when the devi
ce is deli
vered to the e
nd custo
mer. For dev
ice
sale
s made
to
intermedi
aries such as indire
ct channel dealer
s, revenue is reco
gnised if control of the devi
ce has transferr
ed to
the inter
med
iary and the
intermediary h
as no right to return the dev
ice to receive a refu
nd; otherwise revenue re
cognition is deferred until sale of the
de
vice to an
end
customer by the in
termediary or the expiry of any right of return.
Where refunds are issued to custo
mer
s they are deducted from revenue in the relevant service period.
When the Group has control of goods or services prior to delive
ry to a custo
mer, then the Gro
up is the pr
incipal in the
sale to
the
custome
r. As a
princi
pal, rece
ipts from
, and payme
nts to, supplier
s are reported on a gr
oss basis in revenue an
d operat
ing costs. If anoth
er p
arty has control of
goods or
services prio
r to transfer
to a customer
, then the Gr
oup
is acting as an agent for the other
party and revenue in resp
e
ct of the relevant
obligations is recogn
ised net of any related payment
s to the supplier a
nd recognised revenue represent
s the margin earned
by the Group. See
‘Critic
al accoun
ting judgemen
ts an
d key source
s of estim
ation uncer
tainty’ in n
ote 1 for
details
.
Customers ty
pically p
ay in adv
ance for prepay mo
bile ser
vices
and monthly for other communication services. Customers typically
pay for
handsets and o
ther equipment eith
er up-front at the time of
sale or over the ter
m of the related servi
ce agreement.
When re
venue reco
gnised in re
spect of a
customer
contract
exceeds
a
mounts re
ceived or r
eceivabl
e from
a customer at
that tim
e a
contract
asset is r
ecognise
d; contr
act assets
will typic
ally be reco
gnised
for handset
s or other e
quipment
provide
d to customer
s where p
ayment is
recovered by the Group via future service fee
s. If
amounts rece
ived or receiv
able from
a customer ex
ceed revenue r
ecognised for
a contract, for
example if
the Grou
p receives an ad
vance payme
nt from a customer, a co
ntract lia
bility is reco
gnised.
When contra
ct assets or l
iabilitie
s are reco
gnised, a fin
ancing
com
ponent may ex
ist in the contr
act; this is t
ypically the
case
when a hand
set or
other equip
ment is provide
d to a custo
mer up
-front but payment is rec
eived over the te
rm of the relat
ed service agr
eement, in w
hich c
ase the
customer i
s deemed to have re
ceived fin
ancing. If a si
gnific
an
t fin
anc
ing
com
pon
ent i
s pr
ovid
ed
to the customer, the tr
ansactio
n price is
reduced and
interest revenue i
s recognised over the cu
stomer’s payment period usin
g an interest rat
e reflecting the rele
vant ce
nt
ral
ba
nk ra
tes
and customer cred
it risk.
Contract-re
lated costs
When costs dire
ctly relati
ng to a
s
pecific cont
ract are incur
red prior to recog
nising rev
enue for a related obli
gation
,
an
d tho
se costs enhance the
ability o
f the Group
to deliver
an obl
igation and
are expecte
d to be re
covered, th
en those co
sts are reco
gnised on th
e statemen
t of financia
l
position
as fulfil
ment cost
s and ar
e recognis
ed as expen
ses in line
with the reco
gnition o
f revenue
when th
e related obl
igation
i
s deliv
ered.
The direc
t and in
cremental
costs of
acquiring a
contract
includin
g, for e
xample,
certain com
mission
s payabl
e to staff or
agent
s for acq
uiring
customers o
n behal
f of the Grou
p, are re
cognise
d as contr
act acqu
isition cost ass
ets in
the st
atement of financial pos
ition whe
n the related
paymen
t obligat
ion is recor
ded. Costs
are recogn
ised as
an expense
in line with th
e recogni
tion of the r
elated re
venue that
is
expected to be
earned by
the Grou
p; typicall
y this is o
ver the custo
mer contr
act perio
d as new co
mmissions
are paya
ble on co
ntract ren
ewal. Ce
rt
ain amount
s
payable to
agents are de
ducted fr
om revenue re
cognised (s
ee above).
Strategic report
Governance
Financials
Other information
139
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
2. Revenue disa
ggregation and segmenta
l analysis (continued)
Revenue di
saggregatio
n and segmental
income st
atement a
nalysis
Revenue
reported fo
r the year
inclu
des revenu
e from con
tracts with
customers,
compri
sing serv
ice and eq
uipment reven
ue, as wel
l
as other
revenue ite
ms includin
g revenue from leas
es and interest revenu
e arising from tr
ansact
ions with a signifi
cant financin
g compone
nt
.
The table below pr
esents Reve
nue and Adjust
ed EBITDA
aL
for the year
ended 31 March 2022 un
der the
u
pdated segmental report
ing
structure.
Revenue
from
Total
Service
Equipment
contracts
with
Other
Interest
segment
Adjusted
31 March 20
22
revenue revenue
customers
revenue
1
revenue rev
enue
EBITDAaL
€m €m
€m €m €m €m €m
Germany
11,616
1,126
12,742
365
21
13,128
5,669
Italy
4,379
525
4,904
108
10
5,022
1,699
UK
5,154
1,333
6,487
69
33
6,589
1,395
Spain
3,714
369
4,083
73
24
4,180
957
Other Europe
5,00
1
528
5,529
105
19
5,653
1,606
Vodacom
4,635
950
5,585
384
24
5,993
2,125
Other Markets
3,420
404
3,824
6
–
3,830
1,335
Vantage Towers
–
–
–
1,252
–
1,252
619
Common Functions
2
522
53
575
838
1
1,414
(197)
Eliminations
(238)
(1)
(239)
(1,242)
–
(1,481)
–
Group
38,203
5,287
43,490
1,958
132
45,580
15,208
The table below presents Revenue and Adju
sted
EBIT
DAaL for t
he year e
nded 31
March 2
0
22 un
der
the pr
evi
ous s
egme
nta
l rep
orti
ng
structure.
Revenue
from
Total
Service Equipment
contracts
with
Other
Interest
segment
Adjusted
31 March 2022
revenue revenue
customers
revenue
1
revenue rev
enue
EBITDAaL
€m €m
€m €m €m €m €m
Germany
11,616
1,126
12,742
424
21
13,187
5,978
Italy
4,379
525
4,904
108
10
5,022
1,699
UK
5,154
1,333
6,487
69
33
6,589
1,457
Spain
3,714
369
4,083
92
24
4,199
1,041
Other Europe
5,00
1
528
5,529
189
19
5,737
1,770
Vodacom
4,635
950
5,585
384
24
5,993
2,125
Other Markets
3,420
404
3,824
6
–
3,830
1,335
Common Functions
2
522
53
575
838
1
1,414
(197)
Eliminations
(238)
(1)
(239)
(152)
–
(391)
–
Group
38,203
5,287
43,490
1,958
132
45,580
15,208
Notes:
1
Other revenue inc
ludes leas
e revenue recognise
d under IFRS 16
‘L
eases’ (see note 20 ‘Leases’).
2
Comprises c
entral teams
and business fu
nctions.
Strategic report
Governance
Financials
Other information
140
Vodafone Group Plc
Annual Report 2022
The tables belo
w present R
evenue and A
djusted
EBITDA
aL comparat
ive inform
ation for the years ende
d 31 March 2021 and 31 Mar
ch 2
02
0
under the previou
s segmental reporting structur
e.
R
evenue
from
Total
Service
Equipment contracts
with
Other
Interest segment Ad
justed
31 March 2021
revenue revenue
customers
revenue
1
revenue rev
enue
EBITDAaL
€m €m
€m €m €m €m €m
Germany
11,520
1,055
12,575
380
29
12,984
5,634
Italy
4,458
446
4,904
97
13
5,014
1,597
UK
4,848
1,206
6,054
44
53
6,151
1,367
Spain
3,788
292
4,080
64
22
4,166
1,044
Other Europe
4,85
9
549
5,408
124
17
5,549
1,760
Vodacom
4,083
800
4,883
282
16
5,181
1,873
Other Markets
3,312
441
3,753
12
–
3,765
1,228
Common Functions
2
470
36
506
862
–
1,368
(117)
Eliminations
(197)
(1)
(198)
(171)
–
(369)
–
Group
37,141
4,824
41,965
1,694
150
43,809
14,386
R
evenue
from
Total
Service
Equipment contracts
with
Other
Interest segment Ad
justed
31 March 20
20
revenue revenue
customers
revenue
1
revenue rev
enue
EBITDAaL
€m €m
€m €m €m €m €m
Germany
10,696
1,055
11,751
300
25
12,076
5,077
Italy
4,833
583
5,416
101
12
5,529
2,068
UK
5,020
1,333
6,353
63
68
6,484
1,500
Spain
3,904
318
4,222
51
23
4,296
1,009
Other Europe
4,89
0
539
5,429
94
18
5,541
1,738
Vodacom
4,470
864
5,334
190
7
5,531
2,088
Other Markets
3,796
552
4,348
36
2
4,386
1,400
Common Functions
2
494
53
547
1,020
–
1,567
1
Eliminations
(232)
(2)
(234)
(202)
–
(436)
–
Group
37,871
5,295
43,166
1,653
155
44,974
14,881
Notes:
1
Other revenue inc
ludes leas
e revenue recogni
sed under IFRS 16
‘L
eases’ (see note 20 ‘Leases
’)
.
2
Comprises c
entral teams a
nd business fu
nctions.
The total future revenue from the r
emaining term of Group’s contracts with customers for performance o
bligations
not ye
t delive
red to those
cust
omers at 31 Ma
rch 2022 is
€20,013 mi
llion (2021: €2
1,038 million
; 2020: €20
,336 milli
on); of which €12,
913 mil
lion (2021: €
14,110
million;
2020: €13,456
million) is ex
pected to be recognised within the next year and the majority of the rem
aining amount i
n
the follow
ing 12 mont
hs.
Strategic report
Governance
Financials
Other information
141
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
2. Revenue disa
ggregation and segmenta
l analysis (continued)
Se
gmental an
alysis
The Group’s o
perating se
gments are est
ablished
on the basis of those components of the Group that are
evaluated regularly by th
e chief
operating decision maker in deciding how to allocate resources and in
assessing performance. The Group has determined the chief
oper
ating
decision ma
ker to be its
Chief Exec
utive. The Grou
p has a sin
gle
group of
similar services and pr
odu
cts, be
ing the sup
ply of co
mmunic
ations
services a
nd related pro
ducts.
Following the IPO of Vantage Towers A.G. (‘Vantage Towers’)
in Ma
r
ch 2021, the Group has updated its segmental reporting struct
ure to reflect
the way in which the Group no
w manages its operations
with Vantage Towers now re
ported as a new segment within the Vod
afone Gro
up’s
financial results.
This change in reporting
structure has taken effe
ct for the year ended 31 March 2022
onwards. Total revenue
is un
affected as
charge
s from Va
ntage Tower
s to operat
ing com
panies are
eliminat
ed
on consolida
tion. There has been
no
change to t
he segm
ental
presentation of amounts derived from the income statement for comparat
iv
e
periods, which remain as previously disclosed. Segmen
tal
inform
ation for the yea
rs ended 31
March 2021 a
nd 31 March
2020
is pres
ented
on the previous b
a
sis of seg
mental reportin
g.
Revenue is
attributed to a country based on the loc
ation of the Grou
p company reporting th
e
revenue. Trans
actions bet
ween operatin
g
segments are ch
arged at arm’s-l
ength pri
ces.
With the exce
ption of
Vodacom,
which is
a legal ent
ity encompas
sing So
uth Africa an
d certain ot
her small
er Afric
an markets
, and
Van
tage
Towers, whi
ch comprise
s compani
es provi
ding mobile to
wer infrastru
c
ture in a number o
f European m
arkets, se
gment inform
ation is
primar
ily
provide
d on the
basis of geo
graph
ic areas
, being the
basis on
which th
e Group m
anages i
ts worl
dwide inte
rests
.
The operat
ing se
gments for Ger
many, It
aly, UK,
Spain, Vo
dacom an
d Vantage
Towers ar
e individ
ually mat
erial for t
he Grou
p and ar
e each
reporting se
gments for wh
ich certa
in financial info
rmation is
pr
ovided.
The aggregat
ion of smaller operatin
g segments into the
Other Europe
and Other Mark
ets reporting segments refle
cts, in the opinion of
management
, the similar local mar
ket economic ch
aracterist
ics
an
d regul
atory
environments for each of those operating segments as well as the
simil
ar product
s and ser
vices sol
d and co
mparable
classe
s of c
ust
omer
s. In
the case of the Othe
r Europe region (comprising Albania
, Czech Republic, Greece, Hungary, Irelan
d, Portugal and Romania), this
l
argely reflects
membership or
a close
association
with the Euro
pean Union
, while the Other M
arkets seg
ment
(compri
sing Egypt,
Ghana and Turkey
) largely
includes developing economies with less stable
economic or regul
atory environments. Common Functions is a separate reporting se
gme
nt and
compris
es activ
ities whi
ch are unde
rtaken pr
imarily i
n central
Group en
tities that do no
t meet the
criteri
a for aggre
gation wit
h other reporting
segments.
A reconciliation of adjusted EBITDAaL, the Grou
p’s measure of s
egmen
t profit, to the Group’s profit or loss before taxation for
the financial year is
shown be
low.
2022
2021
2020
€m
€m
€m
Adjusted EBITDAaL
15,208
14,386
14,881
Restructuring costs
(346)
(356)
(695)
Interest on lease liabilities
398
374
330
Loss on disposal of owned assets
(28)
(30)
(54)
Depreciation and amortis
ation on owned assets
(9,858)
(10,187)
(10,454)
Share of results of equity ac
counted associates and joint ventures
211
342
(2,505)
Impairment losses
–
–
(1,685)
Other income
79
568
4,281
Operating profit
5,664
5,097
4,099
Non-operating expense
–
–
(3)
Investment income
254
330
248
Finance costs
(1,964)
(1,027)
(3,5
49)
Profit before taxation
3,954
4,400
795
Strategic report
Governance
Financials
Other information
142
Vodafone Group Plc
Annual Report 2022
Segmenta
l asset
s
The tables belo
w present the s
egmental ass
ets
for the year ended 3
1 March 2022 in line with our u
pdated segmen
tal reporting str
ucture
and
under the previou
s basis of segmental re
porting.
Non-current Capi
tal
Right-of-use
Other additions to
Depreciat
ion
and
31 March 2022
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment
loss
€m €m €m €m €m €m
Germany
43,190
2,670
795
–
3,981
–
Italy
10,519
840
670
255
1,929
–
UK
6,226
832
580
229
1,905
–
Spain
6,433
676
422
291
1,499
–
Other Europe
8,548
1,009
502
126
1,511
–
Vodacom
6,383
853
187
–
920
–
Other Markets
2,467
530
229
–
598
–
Vantage Towers
8,179
366
320
–
523
–
Common Functions
2,103
844
123
–
979
–
Group
94,048
8,620
3,828
901
13,845
–
Non-current Capi
tal
Right-of-use
Other additions to
intangible assets
3
Depreciat
ion
and
31 March 2022
assets
1
additions
2
asset additions
amortisation
Impairment
loss
€m €m €m €m €m €m
Germany
47,310
2,885
909
–
4,112
–
Italy
10,519
840
670
255
1,929
–
UK
7,612
888
639
229
2,073
–
Spain
7,066
704
478
291
1,567
–
Other Europe
10,588
1,076
593
126
1,667
–
Vodacom
6,383
853
187
–
920
–
Other Markets
2,467
530
229
–
598
–
Common Functions
2,103
844
123
–
979
–
Group
94,048
8,620
3,828
901
13,845
–
Notes:
1
Comprises goodwil
l, other intangible assets and property,
plan
t and
equipmen
t.
2
Includes addit
ions to property, plant
and equipment (exclu
ding right-of-use asse
ts,), computer software an
d developmen
t costs
, reported
within Int
angible assets.
3
Includes additions to licences and sp
ectrum and
customer
base acqui
sitions.
Strategic report
Governance
Financials
Other information
143
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
2. Revenue disa
ggregation and segmenta
l analysis (continued)
Segmenta
l asset
s
The tables below present the comp
ar
ative segme
ntal assets f
or the ye
ars ended
31
March 2021 and
31 March 2020 under the previou
s
segmental reportin
g structure.
Non-current Cap
ital
Right-of-use
Other additions to
Depreciat
ion
and
31 March 2021
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment
loss
€m €m €m €m €m €m
Germany
47,563
2,772
1,133
1
4,836
–
Italy
10,707
805
758
17
2,025
–
UK
7,968
822
1,138
–
2,202
–
Spain
7,213
772
700
9
1,579
–
Other Europe
10,369
968
1,016
431
1,727
–
Vodacom
5,839
703
174
–
872
–
Other Markets
2,988
512
247
439
666
–
Common Functions
2,145
829
140
–
194
–
Group
94,792
8,183
5,306
897
14,101
–
Non-current Cap
ital
Right-of-use
Other additions to
Depreciat
ion
and
31 March 2020
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment
loss
€m €m €m €m €m €m
Germany
48,266
2,278
912
1,613
4,805
–
Italy
11,119
697
1,645
24
1,958
–
UK
7,790
753
733
–
2,160
–
Spain
7,229
761
386
–
1,763
(840)
Other Europe
9,138
823
298
29
1,706
(740)
Vodacom
5,400
802
174
55
939
–
Other Markets
2,963
587
290
55
672
–
Common Functions
2,217
821
155
–
171
(105)
Group
94,122
7,522
4,593
1,776
14,174
(1,685)
Notes:
1
Comprises goodwil
l, other intangible assets and prop
erty,
plan
t and equipment.
2
Includes addi
tions to property, plant
and equipment (exclu
ding right-of-use
assets,), computer software an
d developmen
t costs
, reported w
ithin Inta
ngible assets.
3
Includes additions to licences and sp
ectrum and
customer
base acqui
siti
ons.
Strategic report
Governance
Financials
Other information
144
Vodafone Group Plc
Annual Report 2022
3. Op
erat
ing prof
it
Detailed belo
w are the key amounts
recognised in arriving at
our
op
erating profit
2022
2021
2020
€m
€m
€m
Amortisation of intang
ib
le assets (note 10)
4,044
4,421
4,459
Depreciation of property,
plant an
d equipment (note 11):
Owned assets
5,857
5,766
5,995
Leased assets
3,944
3,914
3,720
Impairment losses (note 4)
–
–
1,685
Staff costs (note 24)
5,334
5,157
5,462
Amounts related to inventory included in cost of sales
5,671
5,160
5,699
Own costs capitalised attributabl
e to the construction or acquis
ition of propert
y, plant and
equipment
(1,092)
(995)
(902)
Gain on disposal of Indus Towers Limited
1
110
–
–
Pledge arrangements in respect of Indus Towers Limited
1
(note 29)
(15)
(429)
–
Net gain on formation of TPG Te
lecom
1
(note 12)
–
1,043
–
Net gain on formation of Indus T
owers Limited
1
(note 12)
–
292
–
Settlement of tender offer to K
DG shareholders
1
–
(204)
–
Net gain on disposal of Vodafone New Zealand
1
–
–
(1,078)
Net gain on disposal of tower infrastructure in Italy
1
–
–
(3,356)
Net gain on disposal of Vodafone
Malta
1
–
–
(170)
Note:
1
Included
in Other i
ncome an
d expense in t
he Conso
lidated incom
e statement
.
The total remuneration of the Group’s auditor
, E
rnst
& Young LLP and other member firms of Ernst & Young Global Limited, for se
rvice
s
provide
d to the Group durin
g the year ended 31 Mar
ch 2022 is analys
ed below.
2022
2021
2020
Re-presented
1
€m
€m
€m
Parent company
4
3
4
Subsidiaries
2
19
18
17
Subsidiaries - new accounting standards
3
–
–
1
Audit fees
4
23
21
22
Vantage Towers IPO
5
–
11
5
Audit-related
6
2
–
1
Corporate finance
7
–
–
1
Non-audit fees
2
11
7
Total fees
25
32
29
Notes:
1
Audit fee
s of subsidiaries
for the year ended
31 March 2021 have
increa
sed by €1 million compared to the
amount previously
re
ported. Simila
rly, Vantage Towers
IPO non-a
udit fees have
increased by €3 mill
ion. This is to i
nclude fees agreed
during the year ended 31
March 2022 but which re
lated to the year ended
31 March 2021.
2
During
the year ended 31 March 2021, a
udit fees of €1 millio
n were incurred
for incremental f
inancial statement audit
service
s duri
ng the IPO of Va
ntage Towers
A.G.
3
Fees for the implem
entation of new accou
nting standards, no
tably IFRS 15 ‘Revenue
from Contracts wi
th Customers’ and I
FRS 16
‘Leases
’.
4
Includes fees in conn
ection with the int
erim review, prelim
inary announ
cement and contr
ols audit required un
der Section 404
o
f the Sarbanes O
xley Act. In
total this
amounted to €1 mi
llion in
each of the yea
rs presented.
5
Fees incu
rred for IPO services
relating
to the
IPO of Vantage Towers A.G. o
n 18 March 2021.
6
Fees for
statutory and reg
ulatory filin
gs during the year.
7
At the
time of the B
oard decision
to recommend Erns
t & Young LLP a
s the statutory
auditor for
the
year ended 31 March 2020 i
n February 2019, Ernst & You
ng LLP were providing a
range of
services to t
he Group. All se
rvices that w
ere prohibited
by the Fi
nancia
l Reporting C
ouncil (‘FRC’
) or Securities and
Exchange
Comm
ission (‘SEC
’) for a
statutory audit
or to provide
ceased by 31
March 2019. All engagements that were not prohibited by the FRC or
SEC bu
t were not in accordance with the Group’
s own internal
approval pol
icy for non-au
dit services, ceased early in the
financial year ende
d 31 March 2020 to enable
a smooth tran
sition to alternat
ive suppliers, where req
uired.
Strategic report
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Financials
Other information
145
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
4. Im
pairment
losses
Impa
irment occurs whe
n the carrying val
ue of assets is greate
r than the present va
lue of the ne
t
c
ash flows
they a
re expected to gen
erate. We review the ca
rrying value of assets for ea
ch country
in which we opera
t
e
at leas
t annually. For f
urther details of our im
pairment revie
w process see ‘Critical acco
unting judgemen
ts
and key s
ources
of esti
mati
on uncert
aint
y’ in note 1
‘Basis
of prepar
ation’ t
o the
conso
lidated fi
nanci
al
statemen
ts.
Accounting policies
Goodwill
Goodwill is not subject to amortisation but is tested for impair
m
ent ann
ually or whene
ver there is
an indica
tion that the
asset
may b
e impaired.
For the purpose of impairment testing, assets are grouped at the lowes
t levels for which there are separately identifiable cash
flow
s, known as
cash-gener
ating units. The deter
mination of
the Gro
up’s ca
sh-generati
ng units i
s primar
ily based on the
geographic
area where t
he Group
supplies c
o
mmu
nications services and products. If cash flows from assets within one jurisdiction are largely independent of the
cash flows from
other asset
s in that same ju
risdictio
n and management
monitors
performan
ce separately
, multiple
cash-generatin
g units are ident
ified w
ithin
that geo
graphic a
rea.
If the recoverable amount of the
cash-generating unit is
less than the carrying amount
of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis
of the carrying
amount of e
ach asset
in the unit. Impa
irment losse
s recognise
d for goodwill are not reversible
in subsequent periods.
The reco
verable amou
nt is the h
igher of
fair value l
ess costs o
f dispos
al and
value in u
se. In asses
sing val
ue in use, th
e esti
mate
d future cash
flows are discounted to their prese
nt value using a pre-tax discount rat
e that reflects current market assessments of the time
value
of money
and the risks specific to the asset fo
r which the
estimates of future cash flows have not been adjusted.
Managem
ent prepare
s formal f
ive year pl
ans for the Gro
up’s c
ash-generatin
g units
, which are th
e basis fo
r the valu
e in use cal
c
ulations.
Property, pl
ant and equipment
, fi
nite lived intangible as
sets an
d equity accounted investments
At each reporting
period date, the Group re
views the carrying amounts
of its property, plant and eq
uipment, finite lived in
tang
ible ass
ets and
equity-account
ed investments
to
determine whether th
ere is any ind
ication that th
ose assets h
ave suffere
d an impairment lo
ss.
If any s
uch
indication ex
ists, the recov
erable amount of the ass
et is estima
ted in o
rder to deter
mine the ex
tent,
if any, o
f the impairmen
t
loss. Where it
is not
possible
to estim
ate the recover
able amou
nt of an in
dividual
asset, the
Group esti
mates the re
coverabl
e amount o
f the cash-g
ene
rating un
it to
which the asset bel
ongs.
If the reco
verable
amount of an
asset o
r cash-gener
ating unit
is estimated to
be less th
an its carrying
amount, the c
arrying am
ount of the asset
or cash-gener
ating un
it is reduce
d to its recov
erable amou
nt an
d an im
pairment lo
ss is reco
gnised
immedi
ately in the in
come sta
temen
t.
Where there has
been a chang
e in the estima
tes
used to determ
ine
re
coverable amount and an impairment loss subsequently reverse
s, the
carrying amount of the asset or cash-generat
ing unit
is increased to
the rev
ised estimate o
f its recov
erable amount
, not to exc
e
ed the carrying
amount that
would have be
en determine
d had no impair
ment loss b
ee
n recognised for th
e asset or
c
ash-generatin
g unit in prio
r ye
ars and an
impairment lo
ss rever
sal is recogn
ised immed
iately in th
e income stat
ement.
Impairment los
ses
Following our annual impairment review, the impairment charges recognised in the consolidate
d i
n
come
statement within operating
pr
ofit are
stated
below. Furth
er detail on
the events an
d circums
tances th
at led to
the recogni
tion of the im
pairment
charge
s is include
d
below.
2022
2021
2020
Cash-generating unit
Reportable segment
€m
€m €m
Spain
Spain
–
–
840
Ireland
Other Europe
–
–
630
Romania
Other Europe
–
–
110
Vodafone Automotive
Common Functions
–
–
105
–
–
1,685
Strategic report
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146
Vodafone Group Plc
Annual Report 2022
Goodwill
The remaining ca
rrying value
of goodwill at 31
March was as
follows:
2022
2021
€m
€m
Germany
20,335
20,335
Vantage Towers Germany
2,565
2,565
Italy
2,481
2,481
Other
6,503
6,350
31,884
31,731
Key a
ssumptio
ns used
in the
value i
n use ca
lculati
ons
The key assumptions use
d in determining the value in use are:
Assum
ption How
determ
ined
Projected adjusted
EBITDAaL
Projected adjusted EBITDAaL has b
een based on past experience
adjusted for the following:
-
In Europe, mobile revenue is expe
cted to benefit from increased usage as
customers transition
to hig
her data
bundles, and new products and serv
ices are introduced. Fixed revenue is
expected to continue to grow as
penetration is increased
and more products and serv
ices are sold to customers;
-
Outside of Europe, revenue is
expected to continue to grow as the
penetra
tion of faster data
-enabled devices
rises along with higher da
ta bundle attachment rates
, and new
products and services are introduced. The
Other Markets segment is also expe
cted to benefit from increased usage
and penetration of M
-Pesa in Africa;
and
-
Margins are expected to be impac
ted by negative factors such as
the cost of acquiring
and retaining
customers in increasingly comp
etitive markets and by positive factors
such as the efficiencies expected from
the implementation of
Group
initiatives.
Projected capital
expenditure
The cash flow forecasts for capital
expenditure are based on
past experience and include
the ongoing capital
expenditure required to maintain our
networks, provid
e products a
nd services in line with customer
expectations, including of higher
data volumes and speeds,
and to meet the popula
tion coverage requi
rements
of certain of the Group’s lic
ences. In
Europe, capital expenditure is required
to roll out
capacity-building next
generation 5G and gigabit networks. Outside of Europ
e, capital expenditure will
be required for the continued
rollout of current and ne
xt generation mobile networks in
emerging
markets. Capital expenditure includes cash
outflows for the purchase of property
,
plant and equipment
and computer software.
Projected licence and
spectrum payments
To enable the continued provision of pr
oducts and services,
the cash flow
forecasts for licence and spectrum
payments for each relevant cash-genera
ting unit include amounts f
or expe
cted renewals and
newly available
spectrum. Beyond the five year forecast period,
a long-run cost of
spectrum is assumed.
Long-term growth rate
For the purposes of the Group
’s value in use calculations, a
long
Ǧ
term growth rate into perpetuity is a
pplied
immediately at the end of the
five year fore
cast period and is base
d on the lower of:
-
the nominal GDP growth ra
te fore
casts for the country of operation; and
-
the long-term comp
ound annual growth rate in adjus
ted EBITDAaL as estimated by management.
Long-term compound annual growth rates
determined by manageme
nt may be lower tha
n forecast nominal
GDP growth rates due to the following
market-specific factors: competitive
intensity levels, maturity of business,
regulatory environment or sector-
specific inflation expectations.
Pre-tax risk adjusted
discount rate
The discount rate applied to the cash
flows of
each of the Group’s cash
-genera
ting units is generally based on
the risk free rate for ten year bonds issued by
the government in th
e resp
ecti
ve market. Where government
bond rates contain a material component of
credit risk, high-quality local corporate bond rates may be used.
These rates are adjusted for a ri
sk premium to reflect both the increased
risk of investing
in equities and the
systematic risk of the specific ca
sh-generating unit. In making th
is adjustment, inputs
required are the equity
market risk premium (that is the required r
eturn over and above a risk free rate by
an investor who is investing in
the market as a whole) and the risk adjustment, beta, applied to
reflect the risk of the
specific
cash-generating
unit relative to the market as a whole.
In determining the risk ad
justed discount rate, manag
ement has appl
ied an adjustment fo
r the
systematic risk to
each of the Group’s cash-generating
companies determined using an
average of the betas
of comparable listed
telecommunications companies and, wh
ere available and appropriate, across
a specific territory. Management
has used a forward-looking equity market risk
premium that takes into consid
eration both studies by
independent economists
, the long
-term average equity market
risk premium and the market risk premiums
typically used by va
luations practitioners.
The risk adjusted discount ra
te is also based on typical leverage rati
os of te
lecommunications companies in
each cash-generating units'
respective market or region.
Strategic report
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Other information
147
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
4. Im
pairment
losses
(conti
nued)
Year ende
d
31 Marc
h
2022
The Group performs its annual impairment test for goodwill and in
definite lived
intangible asset
s at 31 March an
d when there is
an indic
ator of
impairment of
an asset. At
each repo
rting period dat
e judgement
is exercised
by management in
determini
ng whether any inte
rnal
or external
sources of information observed are indicative that the carrying amount of any of the Group’s cash generating units is not reco
verable
.
As a large owner of infrastru
cture and consumer of energy
, the Group has exposure to cl
imate change related ris
ks such as energ
y cost
increases
, asset damage
and servi
ce disruption
. The long ran
ge pl
ans u
sed in the Gro
up’s impair
ment testing in
clude for
ecast en
er
gy costs
and
other co
sts that
are embe
dded in t
he plann
ing proces
s to del
iver the Gr
oup’s zero
carbon t
argets. Th
e long ran
ge plans
also inc
lude
capital
expenditur
e in relation to
the Group’s use of
durable and e
ner
gy efficie
nt infrastructure an
d
the costs of th
e Group’s extensiv
e an
d
on
going
network maintenance programme. Furthermore, the Grou
p will c
on
tin
ue to develop stro
ng reactiv
e initiatives to
manage the unpre
d
ic
tabl
e
impacts of
future cl
imate-rel
ated ris
ks. Climate
change,
therefore, h
as not had
a material im
pact on the ou
tcome of th
e Group’
s
impair
ment
testing
and the Grou
p will cont
inue to ref
ine its ap
proach to
modellin
g climate-rel
ated risks and o
pportunit
ies in the value in
us
e cal
cula
tion
s.
As the war in Ukraine continues, it is challenging to predict the full ex
tent and duration of its impact on the economy and the
Group’s
busines
ses. Howe
ver, to asse
ss a po
tential imp
act of this o
n the Grou
p’s impai
rment testin
g, man
agement pre
pared scen
ario analy
sis base
d on
adjustments to the long range plans for high level est
imates of
market risk
s impacted
by the war. Th
is anal
ysis did no
t indicat
e a r
isk of
impairment
at 31 Mar
ch 2022. Manage
ment will u
pdate the cash fl
ows
and as
sumptions used in
the Gr
oup’s impa
irment testing at fu
ture
reporting dates with late
st best estimate
s.
No impairments were reco
gnised for the Group’s cash gener
ating units during
the year to 31 March 2022.
Value in use assumptions
The table below sho
ws key assumptions u
sed in the value in use calcul
ations, and se
parately pres
ented cash gene
rating units for
wh
ich the
carrying amount of goodwi
ll
is signific
ant in comparison with the Group’s total carrying amount of goodwill:
Assumpt
ions used in value in use calculation
Germany
Italy
Vantage Towers
Germany Other
% %
% %
Pre-tax risk adjus
ted discount rate
7.4
9.3
6.1
6.2-22.5
Long-term growth rate
0.5
1.5
1.5
1.0-8.9
Projected adjusted EBITDAaL
1
(0.1)
(0.2)
11.0
(5.4)-13.0
Projected capital expenditure
2
19.6-21.8
15.0-16.3
32.0-62.1
10.0-51.4
Sensitivity analysis
The estimate
d recoverable amou
nts of the Group’s o
perations in Ge
rm
any,
Italy, the U
K and Spain exceed their
ca
rry
ing values by
€7.3 billion,
€0.4 b
illion, €1.3 billi
on and €0.1 b
illion respectively. How
ever,
if
the assumpt
ions used in the
impairmen
t review were
change
d to a gre
ater
extent than as presented in the followin
g tab
le, the ch
ang
e
s w
oul
d, in isolation, lead to an impairment loss being recognised f
or the year en
ded
31 Ma
rch 2022
.
Change required for carrying value
to equal recoverable amount
Germany
Italy
UK
Spain
pps pps
pps
pps
Pre-tax risk adjus
ted discount rate
1.4
0.3
1.3
0.1
Long-term growth rate
(1.4)
(0.3)
(1.5)
(0.1)
Projected adjusted EBITDAaL
1
(4.1)
(0.9)
(3.1)
(0.4)
Projected capital expenditure
2
12.6
1.8
4.3
0.5
Notes:
1
Projected Ad
justed EBITDAaL is e
xpressed as the
compound an
nual growth rates in the initial five yea
rs for all
cas
h-generatin
g
units of the pla
ns used for impairme
nt testing.
For the purp
oses of
this disclosure Ita
ly’s FY22 EBITDAaL excludes th
e TIM
settleme
nt.
2
Projec
ted capital expendi
ture, which e
xcludes lic
ences and spectrum,
is expressed as
capital expend
iture as a perc
entage of r
evenue
in the in
itial five years fo
r all cash-genera
ting units
of the plans
used for impairmen
t testing.
For the Group’s operations in Germ
any,
Italy, the UK and S
pai
n management has considered the following reasonably possible chan
ges in pre
-
tax adju
sted discount ra
te, adju
sted EBITDAa
L
1
and lon
g-term growth rate as
sumptions, leaving
all other assumptions
unchanged. The
sensiti
vity analys
is presente
d is pre
pared on the
basis th
at the reaso
nably pos
sible chan
ge in each k
ey ass
umption woul
d not ha
ve a
consequent
ial impact on other assumpt
ions used in the impairment
revie
w. The asso
ciated im
pact on th
e impairmen
t assessment i
s
presented
in the tabl
e overleaf.
Management has c
oncluded that no reasonably possible or foreseeable change in projected capital expenditure
2
would cau
se
the diff
erence
between the c
arrying value and rec
overable amount for any c
ash-generatin
g unit to be mater
ially
different to the base case disclosed overleaf.
Strategic report
Governance
Financials
Other information
148
Vodafone Group Plc
Annual Report 2022
Recoverable amount less carrying value
Germany
Italy
UK
Spain
€
bn
€
bn
€
bn
€
bn
Base case as at 31 March 2022
7.3
0.4
1.3
0.1
Change in pre-tax risk
adjusted discount rate
Decrease by 1pps
14.9
1.7
2.8
1.0
Increase by 1pps
1.7
(0.7)
0.3
(0.6)
Change in long-term growth rate
Decrease by 1pps
1.6
(0.6)
0.4
(0.5)
Increase by 1pps
15.6
1.7
2.8
0.9
Change in projected
adjusted EBITDAaL
1
Decrease by 5pps
(1.4)
(1.6)
(0.7)
(1.1)
Increase by 5pps
17.9
2.8
3.8
1.5
Note:
1
Projected
Adjusted EBITDAa
L is expressed as the
compound an
nual grow
th rates in the initial five years for all cash-ge
neratin
g uni
ts of the plan
s used for impairment
testing. For
the purposes of
this disclosure,
EBITDAaL for
Italy in the yea
r ended 31 March 2022 e
xcludes the TIM sett
lement.
Year end
ed
3
1 March 2021
The disclosures
below for the year ended 3
1 March 2021 are as pre
viously disclosed in the
31 March 2021 Annual Report.
Following the carve-out of Vodafone’s tower infrastructure to V
antage Towers A.G. (‘Vantage Towers’) during the year in Germany
, S
pain,
Portugal, Ireland, Greece, Romania, Czech Republic and Hungary an
d the acquisitions by Van
tage Towers of Vodafone UK’s 50% shar
eholding in
Cornerstone Telecommun
ications Infrastructu
re Limited (‘CTIL’)
an
d the rema
ining share
holding in the V
antage Tow
ers Greece,
man
ageme
nt
consider
s Vodafo
ne’s oper
ating comp
anies an
d Vantage To
wer’s oper
ating co
mpanies i
n the affect
ed geo
graphical ar
eas to re
presen
t two
cash-gener
ating units for th
e purpose of impairme
nt testing as
at 31 March 2
021. Vodafone’s in
vestment in Infrast
rutture Wirele
s
s Italiane S.p.A.
(‘INWIT’) was also tran
sferred to Vantage Towers
during the year.
Goodwill has been allocated on a relative values basis
to
the Vantage Towers
cash-generating units,
wher
e applicab
le, as pa
rt of the towe
r
business carve out from Vodafone’s operations. The cash-generating units described below rel
ate to Vodafone’s mobile and fi
x
ed
line trading
businesses
, unless oth
erwise indic
ated as bein
g part of Vant
age Towers.
Value in use assumptions
The table b
elow shows ke
y assumptions us
ed in the val
ue in use
calcul
ations.
Assumptions used in value in use calculat
ion
Germany Italy
Spain
Ireland
Romania
Vantage Towers
German
y
% % % % % %
Pre-tax risk adjus
ted discount rate
7.4
10.5
9.2
7.7
9.9
6.0
Long-term growth rate
0.5
0.5
0.5
0.5
1.0
1.5
Projected adjusted EBITDAaL
1
1.2
2.1
4.9
0.5
0.9
8.4
Projected capital expenditure
2
19.7-21.5
14.4-15.9
15.7-17.6
12.6-15.1
12.3-15.2
39.1-56.2
Notes:
1
Projected
Adjusted EBITDAa
L is expressed as the
compound an
nual grow
th rates in the initial five years for all cash-ge
neratin
g uni
ts of the plan
s used for impairme
nt testing.
A pro-rata ad
justment
has been made to true
-up 31 March 2021 Adjus
ted EBITDAaL to a
full year where the t
owers business carve-o
ut occurred during the
year.
2
Projec
ted capital expend
iture, which e
xcludes lic
ences and spectrum,
is expressed as
capital expe
nditure as a perc
entage of r
evenue
in the in
itial five years fo
r all cash-
generating un
its of the p
lans
used for impa
irment testing.
Strategic report
Governance
Financials
Other information
149
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
4. Im
pairment
losses
(conti
nued)
Sensitivity analysis
The estimate
d recoverable amou
nts of the Group’s o
perations in Germ
any, Italy, Sp
ain, Ireland, Romania and Vant
age Towers Germa
ny e
xceed
their carrying
values by €7
.4 billion, €0.6 b
illion, €0.3
billion, €0.1 b
illion, €0.1 bi
ll
ion
and €3.5 b
illion, respectively. I
f the
assumptions used
in the
impairment review were changed to a greater extent than
as
presented in the following table, the changes would, in isolat
ion,
l
ead t
o a
n
impairment lo
ss bein
g recognise
d for the y
ear ended 31 Ma
rch 2021.
Change require
d for carrying value to equal recoverab
le amount
Germany Italy
Spain
Ireland
Roman
ia
Vantage Towers
German
y
pps pps
pps pps
pps
pps
Pre-tax risk adjus
ted discount rate
1.3
0.7
0.4
0.7
0.7
5.2
Long-term growth rate
(1.3)
(0.8)
(0.5)
(0.7)
(0.9)
(4.9)
Projected adjusted EBITDAaL
1
(4.0)
(1.5)
(1.5)
(1.6)
(1.9)
(19.3)
Projected capital expenditure
2
12.7
3.0
1.6
2.8
1.9
162.6
Management c
on
sidered the following
reasonably possible changes in key assumptions for projected adjusted EBITDAaL
1
and lo
ng-term
growth rat
e, leavin
g all othe
r assumption
s unchan
ged. Consis
tent
with the pr
ior year, and due to t
he uncertainty of future C
OVI
D-1
9 impac
ts,
manage
ment’s range of re
asonably
possible ch
anges in pro
jected ad
ju
sted EBITDAaL is plus or minu
s 5 percentage points (2
020: +/
- 5
percent
age poin
ts). The sens
itivity
analysi
s present
ed is pre
pared on th
e basis th
at the rea
sonably po
ssible
change in
each key
a
ssumption
would not h
ave a co
nsequential
impact o
n other as
sumption
s used
in
the impairment re
view. The a
ssociat
ed impact on the
impairme
nt
assessment
is presente
d in the tabl
e below.
Management believes that no reasonably possible or foreseeable
change in
the pre-tax adju
sted di
scou
nt r
at
e o
r pr
ojec
ted
cap
ita
l expenditure
2
would cau
se the diffe
rence bet
ween the carry
ing value
and recover
able amount
for any c
ash-genera
ting unit to
be material
ly diff
erent fro
m the
base cas
e disclosed
below.
Recoverable amount less carrying value
Germany
Italy
Spain
Ireland
Romania
Vantage Towers
German
y
€
bn
€
bn
€
bn
€
bn
€
bn
€
bn
Base case as at 31 March 2021
7.4
0.6
0.3
0.1
0.1
3.5
Change in projected
adjusted EBITDAaL
1
Decrease by 5pps
(1.6)
(1.3)
(0.6)
(0.2)
(0.1)
2.4
Increase by 5pps
18.2
2.9
1.4
0.5
0.3
5.0
Change in long-term growth rate
Decrease by 1pps
1.5
(0.1)
(0.3)
–
–
2.2
Increase by 1pps
16.0
1.6
1.0
0.3
0.2
6.1
The carrying values for Vodafone UK, P
ortugal
, C
zech Republic
, a
n
d
Hungary include go
odwill aris
ing
fro
m acquisit
ions and/or th
e purcha
se
of
operatin
g licen
ces or spectr
um righ
ts. The re
coverable a
mounts for th
ese oper
ating co
mpanies
are also no
t materi
ally gre
ater th
an their
carry
ing values and acco
rdingl
y are disclose
d
b
elow.
If the a
ssumptions used in the impairment revi
ew were changed to a
greater extent than as pr
esented in the following tab
le, the
change
s would,
in isolation
, lead to
an impairment l
oss being re
cognised in t
he year en
ded 31 Mar
ch 2021.
Change re
quired for carrying value to equal recoverab
le amount
UK
Portugal
Czech
Republic
Hungary
pps pps
pps
pps
Pre-tax risk adjus
ted discount rate
0.8
0.9
1.2
0.3
Long-term growth rate
(0.8)
(1.0)
(1.3)
(0.4)
Projected adjusted EBITDAaL
1
(1.7)
(2.2)
(3.0)
(0.7)
Projected capital expenditure
2
2.5
3.7
7.5
1.5
Notes:
1
Projected a
djusted EBITDAaL i
s expressed as the
compound annu
al growth rates in the initia
l five years for all
cas
h-generatin
g
units of the
plans used for imp
airment testi
ng. A pro-
rata adjustme
nt
has been made to true
up 31 March 2021
adjusted EBITDAaL to
a fu
ll year w
here the towers business c
arve-out occurred d
uring the
year.
2
Projec
ted capital expendi
ture, which e
xcludes lic
ences and spectrum,
is expressed as
capital expend
iture as a perc
entage of r
evenue
in the in
itial five years fo
r all cash-
generating un
its of the p
lans
used for impa
irment testing.
Strategic report
Governance
Financials
Other information
150
Vodafone Group Plc
Annual Report 2022
Year end
ed
3
1 March 2020
The disclosures
below for the year ended 3
1 March 2020 are as pre
viously disclosed in the
31 March 2020 Annual Report.
For the year ended 3
1 March 2020, the Group recorde
d impairment
charges of
€0.8 billion, €
0.6 billion, €0
.1 billion
and €0.1 bi
ll
ion with respect
to the Group’s inve
stments in Spain
, Ireland, Romania and Vodafone Automotive res
pectively. The impairment ch
arges relate solel
y to goodwill
and are re
cognis
ed in the co
nsolidated in
come st
atement withi
n operatin
g profi
t/(loss). Th
e recover
able amo
unts for S
pain, Irel
and, Romania
and
Vodafone Automotive are €5.6 b
illion, €1.2 billion, €0
.9 billion and €
0.0 billion respectively, a
n
d
based on va
lue in use c
alculat
ions.
The COVID-19 outbre
ak developed rapidly in early 2020. M
any countr
ie
s hav
e requ
ired
b
usine
sses
to limi
t or su
spen
d ope
ratio
ns a
nd
implemente
d travel
restriction
s and quar
antine me
asures. The
measures taken to
contain th
e virus h
ave adversely
affecte
d econom
ic activi
ty
and dis
rupted many
businesses
. As the outbr
eak contin
ues to pro
gress and e
volve, it i
s extremely
challen
ging to pr
edict the ful
l extent and
duration of
its impact o
n Vodafone’
s businesse
s and the countr
ie
s where Vodafone oper
ates. Based on inf
ormation avail
able as at
31 March
2020, m
anagement
made addition
al adjustmen
ts to the fiv
e
year busi
ness plans used in the Group’s im
pairment testin
g in order to ref
lect the
estimated impac
t. The impairment cha
r
ges
recognised and discussed imm
ediately below, were ba
sed on expected c
ash flows after
ap
ply
ing
these adjustment
s.
Challen
ging trading and econo
mic conditions in Spain mater
ialise
d in the prio
r financ
ial year an
d management re
cognise
d an impa
irm
ent
charge following
a re
duction in p
ro
jected cas
h flo
ws
. Durin
g the year ended
31 March 2020 there was an observable repositioning
towards low-
cost bran
ds and competiti
ve intensity
with
in
the multi-br
anded m
arket was ex
pected to re
main ele
vated in
the medium term. The
se
factors led
to management projecting lower cash flows and recognising
an impa
ir
ment charge with respect to the Gr
oup’s investment in Spain.
The impa
irment char
ge recog
nised with r
espect to Ir
eland wa
s attributa
ble to incre
ased comp
etition an
d the aforemen
tioned in
cre
ase
d
economic uncertainty. As
a consequence, growth an
d ARPUs were expected to be lower
. Management reflecte
d these assumptions in
expected cash
flows.
The impairment ch
arges recognised with respe
ct to Romania and Vodafone Automotiv
e reflect management’s latest a
ssessment of lik
ely
tradin
g and econo
mic con
ditions
in the five y
ear busine
ss plan
.
Management’s v
iew of the long-term potential in the
se markets r
ema
ins
unchan
ged.
The Europe
an
Liberty G
lobal assets
acquired i
n July 2019 were
su
bsumed wi
thin existing cash-generat
ing un
its
in Germany, C
zech Republ
ic,
Hungary
and Rom
ania. The
primary r
eason for
acquirin
g the busin
esses
was to creat
e a conve
rged n
ational
provider of
digital i
nf
rastru
cture in
Germany, together with creating converged communications operators in the Czech Republic, Hung
ary and
Romania. Following the in
tegrat
ion
of the acquired businesses, management considered the
cash flows
within these cash-generating units to be largely inter
depend
en
t an
d
monitors performance on
a country-level basis.
On 31 March
2020, the Gro
up merged its
passive to
wer infrastr
uctu
re in Italy
with INWIT. On the
date of the mer
ger, management
monitored
performanc
e of its oper
ations in Ital
y on a country-
wide basis
and considered Vo
dafone Ital
y, includ
ing its pass
ive tower infr
a
structure, to b
e one
cash-gener
ating unit fo
r the purpos
e of impairment
testing as at
31 March 2020. No impairment in rel
ation to Vodafone Italy wou
ld b
e
necessary
if impair
ment testing wa
s performe
d on a post-mer
ger basi
s at 31 March
2020.
Value in use assumptions
The table b
elow shows ke
y assumptions us
ed in the value in use calcul
ations.
Assumptions used in value in use calculation
Germany Italy
Spain
Ireland
Romania
Vodafone
Automoti
ve
% % % % % %
Pre-tax risk adjus
ted discount rate
7.5
10.3
9.2
7.6
10.2
9.1
Long-term growth rate
0.5
0.5
0.5
0.5
1.0
1.9
Projected adjusted EBITDAaL
1
3.8
0.2
8.2
3.0
8.0
31.3
Projected capital expenditure
2
20.1-20.7
12.5-13.4
16.2-18.1
10.7-15.2
13.7-18.5
14.1-23.4
Notes:
1
Projected
Adjusted EBITDAa
L is expressed as the
compound an
nual grow
th rates in the initial five years for all cash-ge
neratin
g uni
ts of the plan
s used for impairme
nt testing.
2
Projec
ted capital expend
iture, which e
xcludes lic
ences and spectrum,
is expressed as
capital expe
nditure as a perc
entage of r
evenue
in the in
itial five years fo
r all cash-
generating un
its of the p
lans
used for impa
irment testing.
Strategic report
Governance
Financials
Other information
151
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
4. Im
pairment
losses
(conti
nued)
Sensitivity analysis
The estimate
d recoverable amou
nt of the Group’s operations
in Ge
rmany and Italy exceed their carrying values
by €6
.6 billion an
d €1.8
billion
respectively. If the assumptions used in the impairm
ent review were changed to a greater extent than as pr
esented in the follow
ing
tab
le, th
e
changes would,
in isola
tion, lead to an impairment los
s bein
g recogn
ised for
the year end
ed 31 M
arch 2020.
Change required for carrying value to
equal recoverable amount
Germany Italy
pps pps
Pre-tax risk adjus
ted discount rate
1.1
1.7
Long-term growth rate
(1.0)
(2.0)
Projected adjusted EBITDAaL
1
(3.2)
(3.1)
Projected capital expenditure
2
11.4
7.9
Management c
on
sidered the following
reasonably possible changes in the key adjusted EBITDAaL
1
and lon
g-term growth rate as
sumptions,
leaving all other assumptions unchanged. Due to increased uncertaint
y following
the COVID-19 outbreak, management has widened t
he ran
ge
of reasonably possible changes in the key ad
justed EBITDAaL growth
rate assump
tion to plus or minus 5 per
centage poin
ts (2019:
2 per
centage
points). The sensi
tivity analys
is presente
d
is prepared on the
basis that
the reason
ably po
ssible change in each key
assu
mption
would not have
a consequ
ential impact on o
ther as
sumptions used in t
he impairme
nt r
eview. The
associate
d impact on
the impairmen
t assessme
nt i
s
presented in the table below, with the exception of Vodafone Automotive, where no reasonably possible change in the ke
y
as
sum
pt
ions would
materially
change the impair
ment charge recogn
ised.
Management believes that no reasonably possible or foreseeable change in the pre-tax adjusted discount rate or projected capita
l expenditure
2
would cau
se the diffe
rence bet
ween the carr
ying value
and reco
verable amoun
t for any c
ash-genera
ting un
it to be mater
ially diff
erent to the
base cas
e disclosed
below.
Recoverable amount less carrying value (p
rior
t
o reco
gnition of impairment char
ges)
Germany
Italy
Spain
Ir
eland
Romania
€
bn
€
bn
€
bn
€
bn
€
bn
Base case as at 31 March 2020
6.6
1.8
(0.8)
(0.6)
(0.1)
Change in projected
adjusted EBITDAaL
1
Decrease by 5pps
(3.3)
(1.0)
(2.3)
(1.1)
(0.3)
Increase by 5pps
18.4
5.1
0.9
–
0.1
Change in long-
term growth rate
Decrease by 1pps
0.2
0.8
(1.5)
(0.8)
(0.2)
Increase by 1pps
15.8
3.0
–
(0.4)
–
The carrying values for Vodafone UK, P
ortugal
, C
zech Repu
blic a
nd
Hungary inclu
de goodwill
arising
from ac
quisitions and
/or the
purchase of
operatin
g licen
ces or spectr
um righ
ts. While th
e recover
able amoun
ts for these o
peratin
g compani
es are no
t materiall
y greater t
han their
carry
ing value, ea
ch has a l
ower risk
of givin
g rise to an im
pairment th
at would
be material to
the Grou
p given th
eir relativ
e
size or the
composit
ion of the
ir carrying
value.
If the assumptions used in the impairment review were ch
anged
to
a greater extent than as presented in the following table, the
change
s would,
in isolation
, lead to
an impairment l
oss being re
cognised in t
he year en
ded 31 Mar
ch 2020.
Change required for carrying value
to equal recoverable amount
UK
Portugal
Czech
Rep
ublic
Hungary
pps pps
pps pps
Pre-tax risk adjus
ted discount rate
1.1
1.5
1.7
1.9
Long-term growth rate
(1.3)
(1.6)
(1.8)
(2.2)
Projected adjusted EBITDAaL
1
(2.3)
(3.4)
(4.0)
(3.9)
Projected capital expenditure
2
4.5
7.1
12.5
9.1
Notes:
1
Projected a
djusted EBITDAaL i
s expressed as the
compound annu
al growth rates in the initia
l five years for all
cas
h-generatin
g
units of the
plans used
for impairment testi
ng.
2
Projec
ted capital expendi
ture, which e
xcludes lic
ences and spectrum,
is expressed as
capital expend
iture as a perc
entage of r
evenue
in the in
itial five years fo
r all cash-genera
ting units
of the plans
used for impa
irment testing.
VodafoneZiggo
The reco
verable amo
unt for V
odafoneZi
ggo is not
material
ly greater
than its c
arrying
value. If
adverse im
pacts o
f economi
c, com
pet
itive
,
regulato
ry or other f
actors wer
e to cause s
ignifican
t deterior
ation in th
e operation
s of Vodafone
Ziggo an
d the entity’
s expecte
d future
cash
flows, this
may lead to
an impairment loss b
eing recognised.
Strategic report
Governance
Financials
Other information
152
Vodafone Group Plc
Annual Report 2022
5.
Invest
ment
incom
e and f
inanc
ing co
sts
Investme
nt income co
mprises interest r
eceived fr
om short-term i
nvestments an
d other receivabl
es.
Financ
ing costs mainly
arise from in
terest due on bonds a
nd commercial
paper issued, b
ank loans and the
results o
f hedging transaction
s used to manage
foreign exchan
ge and interest ra
te movements.
2022
2021 2020
€m
€m
€m
Investment income
Financial assets measured at amortised cost
249
306
157
Financial assets mea
sured at fair value thro
ugh profit and loss
5
24
91
254
330
248
Financing cos
ts
Financial liabilities
measured at amortised cost
Bonds
1,546
1,722
1,580
Lease liabilities
398
374
330
Bank loa
ns and other lia
bilities
1
469
463
626
Interest on derivatives
(428)
(485)
(354)
Mark-to-market on derivatives
(341)
(1,0
70)
1,16
2
Financial assets mea
sured at fair value thro
ugh profit and loss
36
–
–
Foreign exchange
284
23
205
1,964
1,027
3,549
Net financing c
osts
1,710
697
3,301
Note:
1 Interest c
apitalised fo
r the year ended 31 Mar
ch 2022 was €17 million (2021: €17
million, 2020: €25 mil
lion)
Strategic report
Governance
Financials
Other information
153
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
6. Ta
xa
tion
This not
e explai
ns how
our Gr
oup tax char
ge ari
ses. The d
eferred t
ax secti
on of t
he not
e also provi
des
info
r
ma
tion on our exp
ected future tax cha
rges and se
ts out the tax asse
ts held across the Group tog
ethe
r
with our vie
w on whether or n
ot we expect to
be
able to make
use of these in th
e future.
Accounting policies
Income tax expense
represents the sum of the
current and deferred
taxes.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported in t
he in
come statem
ent
because som
e items of in
come or e
xpense are tax
able or ded
uctibl
e
in differen
t year
s or may neve
r be tax
able or ded
uctibl
e. The
Grou
p’s
liability for current t
ax is calculated using tax rates a
nd laws that have been ena
cted or substantively enact
ed by the reporti
ng
per
iod
date.
The Group recognises provisions for uncert
ain tax positions when the Group has a present obligation as a
result of a past event
an
d
management
judge that it i
s probable that ther
e will be a futur
e outflo
w of economic benefits from the G
roup to settle the obli
g
ation. Uncer
tain
tax posit
ions are
assessed and m
easured on an i
ssue by issu
e basis
within the
jurisdiction
s that we op
erat
e either usin
g management’
s estimate
of the most likely outcome where t
he issues are binary, or the ex
p
ected valu
e approac
h where t
he issues
ha
ve a range
of possib
l
e outcomes.
The Grou
p recogn
ises inte
rest on la
te paid taxe
s as part o
f finan
cing co
sts, and a
ny penalti
es, if
applicabl
e, as
part of the i
ncome tax expense.
Deferred tax is the tax expe
cted
to be payable
or reco
verab
le
in the future arising from temporary differences between the carr
ying amounts of
assets and liabil
ities in the financial stat
ements and the corresp
on
ding tax bases us
ed in the computation
of taxable profit. I
t is acco
unted for
using the statement of financial position liability method. Deferred tax liabilities are gener
ally recognised for all ta
xable t
em
porary differences
and defer
red tax as
sets are r
ecogni
sed to the exten
t that it
is
probable that temporary differences or taxable profits will be
availab
le again
st
which de
ductible te
mporary
differe
nces can be u
tilised.
Such asse
ts and liabil
ities are not re
cognise
d if the tempora
ry di
fference ari
ses from the init
ial reco
gnition (other than
in a
business
combinat
ion) of assets
and liabil
ities in
a transact
ion that a
ffect
s neither the tax
able profit nor the a
ccounting profit.
Defe
rred tax liabil
ities are
not
recognised to the extent they arise from the initial reco
gnition of non-tax deductible goodwill.
Deferred tax liabilities are recogn
ised for ta
x
ab
le tem
porary diffe
rences ari
sing on in
vestments in
subsidiaries an
d asso
ciates
, and interest
s
in
joint ar
rangement
s, except
where the Gro
up is abl
e to contr
ol the reve
rsal of the
temporary
difference
and it is
probable th
at
the temporary
difference will not reverse in the for
eseeable future.
The carrying amount of deferre
d tax assets is reviewe
d at each reporting period
date and adjusted to refle
ct changes in the Gro
up’s as
sessment
that suffici
ent taxable profits will be a
vailable to allow a
ll or part
of the asset
to be recovered.
Deferred tax is cal
culated at the tax
rates that are expe
cted to
apply
in the period
when the liability
is settle
d or the asset
realis
ed, based on tax
rates that ha
ve been enacted or su
bstantively enac
ted by the report
ing period date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current t
ax l
iabilit
ies and when
they either relate to in
come taxes l
evied by the same t
axation
authority on either the same taxable entity or on different tax
a
b
l
e entities whic
h
intend to settle
the curren
t tax asse
ts and liab
ilities on
a net basis.
Tax is ch
arged or
credited to th
e inco
me statement
, except when
it rela
tes to items ch
arged or
credited to
other com
prehensive
income or
directly to equity
, in which case the tax i
s recognised in other comprehensi
ve income or in equity
.
Income tax ex
pense
2022
2021
2020
€m
€m
€m
United Kingdom corporatio
n tax expense/(credit):
Current year
22
24
42
Adjustments in respect of prior years
17
3
(6)
39
27
36
Overseas current tax expense/(credit):
Current year
993
872
900
Adjustments in respect of prior years
81
(30)
80
1,074
842
980
Total curre
nt tax expense
1,113
869
1,016
Deferred tax on origination and re
versal of temporary differences:
United Kingdom deferred tax
(791)
(94)
(318)
Overseas deferred tax
1,008
3,089
552
Total deferred tax
expense
217
2,995
234
Total income tax expense
1,330
3,864
1,250
UK operating profits are more than offset by statutory allowances for capital investment in the UK network and systems plus ong
oing interest
costs including those arising from the €10.7
bi
llion of spectr
um
paymen
ts to
the UK
gover
nment in
2000, 2
013 and
2018.
Strategic report
Governance
Financials
Other information
154
Vodafone Group Plc
Annual Report 2022
Tax charged/(credited) directly to othe
r comprehensive income
2022
2021
2020
€m
€m
€m
Current tax
–
(17)
(26)
Deferred tax
648
(1,009)
830
Total tax charged/(credited) dire
ctly to other compre
hensive income
648
(1,026)
804
Tax credited directly to equity
2022
2021
2020
€m
€m
€m
Deferred tax
–
(2)
–
Total tax credited directly to equity
–
(2)
–
Factors affecting the tax expense for the year
The table below explains the differences
between the expected tax e
xpense,
being the aggregate of th
e Group’s geographical sp
li
t of
profits multiplied by the relevant local tax rates
and the Group’s t
otal tax
expense for
each year.
2022
2021 2020
€m
€m
€m
(res
tated)*
Continuing profit before tax as shown in
the consolidated income statement
3,954
4,400
795
Aggregated expected
income tax expense
1,191
1,124
226
Impairment losses
with no tax effe
ct
–
–
332
Disposal of Group investments
(1)
(8)
(332)
(1,113)
Effect of taxation of associates and
joint ventures, reported within profit before
tax
(66)
56
728
Deferred tax charge/(cred
it) following revaluation
of investments in Luxembourg
1,455
2,120*
(348)
Previously unrecognised temporary
differences we expect to use in the future, including
in
Luxembourg
(708)
(45)
(14)
Previously recognised temporary d
ifferences and losses we no longer expect to use in the
future
74
699*
–
Current year temporary differe
nces (including lo
sses) that we currently do not expect to use
116
170
352
Adjustments in respect of p
rior year tax liabilities
13
(10)
(86)
Impact of tax credits
and irrecoverable taxes
74
90
52
Deferred tax on
overseas earnings
2
–
3
Effect of current year changes in statuto
ry tax rates on defe
rred tax balances
(2)
(667)
(45)
757
Financing costs not deductible/
(taxable) for tax purposes
46
(62)
174
Revaluation of asse
ts for tax purp
oses
in Italy and Turkey
(357)
–
–
Expenses not deductibl
e for tax purposes
165
99
187
Income tax ex
pense
1,330
3,864
1,250
Notes:
*
During the year ended 31 March
2022, we revise
d the calculation
of certa
in impairment reversa
ls recognised by our Lu
xembourg holding compa
nies for the year ended 31 Marc
h 2021; this had
no im
pact on the amount of defer
red tax assets recogn
ised at that date but has ch
anged the amoun
t of our unrecognise
d deferred
tax assets
by €0.
7 billion (unre
cognised
losses of €2.
8 billion
)..
Further detail
s can be found on page 158.
We have adju
sted
certain 31 March 2021 d
isclosures as d
enoted by an *.
1
2021 incl
udes the tax exempt gains re
lating to th
e TPG Telecom Limited merge
r in Australia and I
ndus Towers Limited
in India.
2020 relates to tax exempt disposal gains on Vodafone New
Zealand, Vo
dafone Malta an
d the merger of the Itali
an towers with INW
IT.
2
2022 incl
udes the increase in fut
ure UK tax rate to 25%. 2020
includes the impact o
f a lower corpora
te tax rate in Luxembourg
and the reten
tion of the 19% corp
orate tax rate
in the UK.
Strategic report
Governance
Financials
Other information
155
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
6. Tax
ation (
continue
d)
Deferred tax
Analysis of movements in the net deferred
tax asset balance
during the year:
€m
1 April 2021
19,474
Foreign exchange movements
(29)
Charged to the income statement
(217)
Charged directly to OCI
(648)
Charged direc
tly to equity
–
Arising on acquisitions and disposals
(11)
31 March 2022
1
18,569
Deferred tax assets and liabilities, before offset
o
f balances within
countries, are as follows:
Amount
Net
credited/
recognised
(expensed)
Gross
Gross
L
ess
deferred tax
in income
deferred
deferred tax
amounts
(liability)/
statemen
t
tax as
set
liab
ility
u
nrecognis
ed
ass
et
€m
€m
€m
€m
€m
Accelerated tax depreciation
672
2,589
(1,361)
(58)
1,170
Intangible assets
643
666
(1,801)
11
(1,124)
Tax losses
(1,450)
28,977
–
(10,341)
18,636
Treasury related items
(90)
616
(372)
(562)
(318)
Temporary differences rela
ting to rev
enue recognition
(9)
3
(666)
–
(663)
Temporary differences relating to leases
(3)
1,754
(1,577)
–
177
Other temporary differences
20
1,148
(379)
(78)
691
31 March 20
22
1
(217)
35,75
3
(6,156)
(11,028)
18,569
Analysed in the balance sheet, after offs
et of balances within countries,
as:
€m
Deferred tax asset
19,089
Deferred tax liability
(520)
31 March 2022
1
18,569
At 31 March 2021, deferred tax assets
and liabilities, before offset of
balances within countries
, were as follows:
Amount
Net
credited/
recognised
(expensed)
Gross
Gross
Less
deferr
ed tax
in income
deferred
deferred tax
amounts
(liabili
ty)/
statement
tax
asset
*
liability*
unrecognised*
asset
€m
€m
€m
€m
€m
Accelerated tax depreciation
716
2,331
(2,034)
(9)
288
Intangible assets
336
434
(1,938)
13
(1,491)
Tax losses
(3,292)
30,490
–
(10,400)
20,090
Treasury related items
(9)
761
(37)
(392)
332
Temporary differences rela
ting to rev
enue recognition
(84)
3
(651)
–
(648)
Temporary differences relating to leases
(34)
1,758
(1,568)
–
190
Other temporary differences
(627)
1,095
(335)
(47)
713
31 March 2021
1
(2,994)
36,872
(6,563)
(10,835)
19,474
At 31 March 2021, analysed in
the balance sheet, after offset of
balances within countries,
as:
€m
Deferred tax asset
21,569
Deferred tax liab
ility
(2,095)
31 March 2021
1
19,474
Note:
1
The Group do
es not discount deferr
ed tax assets. This
is
in accordance with
IAS 12.
Strategic report
Governance
Financials
Other information
156
Vodafone Group Plc
Annual Report 2022
Factor
s affecti
ng the
tax charge
in future
years
The Grou
p’s future t
ax char
ge, and
effective t
ax rate, co
uld be aff
ected
by several f
actors
includin
g; tax refo
rm in coun
tries
ar
ound the world,
includin
g any arisin
g from th
e OECD’s or Eu
ropean Com
mission’
s wo
rk on the taxation
of the digit
al economy and
European Comm
iss
ion
initiativ
es such as th
e proposed tax and fi
nancial reportin
g di
rective or as
a consequence of
state aid inves
tigations, future
co
rporat
e acquisiti
ons
and disposals, any restructuring of
our businesses and the resolution of open tax issues (see
below).
On 25 April
2019, the Euro
pean Commis
sion pu
blished its fu
ll decis
i
on in relation to
its invest
igation into t
he ‘group financin
g exemption’ (GFE)
in the UK’s controlled foreign comp
any rules and whether the GFE con
stituted unlawful State Aid. It con
cluded the GFE does not
const
itute
unlawful state a
id when the managing of the fin
ancing activitie
s
is outside the UK. We consider
th
at
th
e Group’s Luxembourg fin
an
cing act
ivities
are pro
perly est
ablishe
d and oper
ate in accor
dance
with EU an
d local l
aw as well
as the OEC
D’s transf
er prici
ng guidelin
es and
on 27 May
2021
the UK tax authorit
ies confirmed it r
eached th
e view
Vodafone was
not in receipt of
any state ai
d relating
to the GF
E. The Europe
an Commissio
n
has indicated it agrees wi
th this conclusion
The Group is
routinely sub
ject to au
dit by
tax author
ities in the territor
ies in whic
h it oper
ates. The Grou
p considers each is
sue on its merits and,
where appro
priate, holds pro
visions
in respect of the
potential ta
x liability th
at may arise.
As at 31 March
2022, the G
roup h
olds provisions for
such potent
ial liabil
ities of €
463 mill
ion (2021: €
606 million).
These provisions rel
ate to multiple issues
, across the jurisdi
ctio
ns in which
the
Group oper
ates. The reduction
during the
year is primarily a result of th
e closure of state tax audits in the US.
As the tax im
pact of
a transact
ion can be un
certain unt
il a conc
lu
sion is reached with the relev
ant tax authority or through a
legal p
rocess,
the
amount ultimately paid may differ materially from the amount
accrue
d and coul
d therefor
e affect the
Group'
s overall p
rofitabil
i
ty and cash
flows in future periods. See Note 29 ‘Contingent liabilities and legal proceedings’ to the consolidate
d fi
n
ancial statements.
At 31 March 2022,
the gross amount and expiry dates of losses available for ca
rry forward are as follows:
Expiring
Expiring
within
beyond
5 y
ears
6
years
Unlimit
ed
Total
€m
€m
€m
€m
Losses for which a deferred
tax asset is recognised
19
259
79,848
80,126
Losses for which no
deferred tax is recog
nised
334
13,162
23,928
37,424
353
13,421
103,776
117,550
At 31 March 2021, the gross
amount and expiry dates
of losses available for ca
rry forward w
ere as follows:
Expiring
Expiring
with
in
beyond
5 ye
ars
6 years
Un
limited*
Total
€m
€m
€m
€m
Losses for which a deferred
tax asset is recognised
63
222
86,623
86,908
Losses for which no
deferred tax is recog
nised
245
13,217
26,290
39,752
308
13,439
112,913
126,660
Deferre
d tax a
s
sets on losses in Luxembourg
Inclu
ded in t
he tab
le above
are losse
s of €6
5,348
million (
2021:
€72,552 mill
ion*) that h
ave arisen
in Luxembo
urg companie
s. A
deferred t
ax
asset
of €16,298 mi
llion (2021: €17,
394 million)
has been reco
gnised in re
spect of thes
e losses, as we
co
nclude it is pr
obable
that the
Lu
xembo
urg en
tities
will c
onti
nue to g
ene
rate ta
xabl
e prof
its in
the fu
ture ag
ains
t whic
h we can
utilis
e thes
e los
ses.
T
hese
ta
x los
ses princip
ally
arose from historical impairments, primarily following the acquisition o
f the Mannesmann Group in 2000.
These losses
arose prio
r to the 2017
tax reform in Luxembourg and are avai
lable to carry forward indefinitely.
The Luxembou
rg com
panies hold i
nvestments in
th
e Group’
s operatin
g compan
ies which
are asses
sed for im
pairment for
local
GAAP f
inan
cial
statement
s using the Gr
oup’s r
ecovera
ble value
calculation
s (see Note
4 ‘Impairmen
t loss
es’). The reco
gniti
on or rever
sal of im
p
airments is
recorded in the local GAAP financial statements and therefore the
carrying values and valuation methodology differs from the go
odwill
assessment for the Group’s consolidated fin
ancial statements. This
ass
essment can gi
ve rise to tax dedu
ctible impair
ments or ta
xable revers
als
of previo
us impairmen
ts.
Following the 2017 tax reform in Luxembourg
,
tax losses expi
re after 17 years and
are only used
after any pre-exis
ting losses. In the year en
ded
31 March 2
020 the Luxe
mbourg comp
anies had t
ax deducti
ble impair
ments r
esulting in a
dditional t
ax losses. No
deferred tax a
sset
is
recognis
ed for these los
ses on the basis
that
they are not foreca
st to be used prior to
the ex
piry of their 17
year life. In a
per
iod where pre-
existing
tax losses
are not utili
sed due to im
pairments ari
sin
g the forecast utilisation timeframe extend
s by one year.
The reversal of impa
irments can result in
a
significant r
eduction to our
deferred tax asset
s and the period o
ver which these a
s
sets can be
utili
sed. In the ye
ar ended
31 March
2022 a re
versal of
previou
s impair
ments of
€6 bill
ion (2021
: €9 billio
n* - pre
viously
€12
bill
ion) has ari
sen in
Luxembourg. Th
is represent
s taxable incom
e against which t
he
brought f
orward los
ses can be u
sed. This
is the main driv
er of t
he reduction
in
the losse
s, and the
associate
d defer
red tax asset
, compare
d to the pr
ior perio
d.
The Luxe
mbourg com
panies’ re
curring
profits ar
e derived f
rom the Gro
up’s intern
al finan
cing, cen
tralise
d procurem
ent, and int
er
national
roamin
g activit
ies. The
se activitie
s have con
sistently
generated t
axable
profits of over €1bn per annum throughout their ex
istence. The Group
has revi
ewed the late
st 5 year fo
recast
s for the Luxem
bourg comp
an
ies, includin
g their ability to continue to
gener
ate income b
eyond th
is
period. T
he forecas
ts consider t
he impact of
the curren
t market co
nditions on
the existin
g financ
ing activit
ies, includ
ing the
current v
iew
of
interest rates, levels of intragroup financing, as well as the future profits generated from the pro
curement and roaming activi
ti
es. Th
e valu
ations
take into account all information at the balance sheet
date and the Group does not forecast potential future impairmen
ts or rev
ersals of
impairment
s.
Strategic report
Governance
Financials
Other information
157
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
6. Tax
ation (
continue
d)
This asses
sment also
included a re
view of the co
mmercial
struc
tures supportin
g
the profits gener
ated from these activities and
consid
ered the
factor
s, under the Gro
up’s con
trol, wh
ich could im
pact the
ability of th
ese activ
ities to gener
ate taxabl
e prof
its. We have
ass
essed that the
current structur
e continues to b
e sustainable under th
e tax laws
subs
tantively enact
ed at the balan
ce sheet da
te and the Group’
s intent
ions to
keep these a
ctivities in
Luxembourg remains un
changed.
Base
d on the curren
t forecasts
, €3,546 mi
llion (2021:
€2,881 mil
l
i
on) of the deferred t
ax asset is forecast t
o be used with
in t
he nex
t 10 years,
and €6,953 milli
on (2021: €4,891 million) used within 20
years. Th
e loss
es are projected to be fully utilised over the next 45
to 48 years. The
decrease in t
he recovery
period over the p
rior year i
s principally
a r
esult of highe
r interest rat
es, driv
ing margins up o
n exi
sti
ng fi
nanci
ng
activ
ities comb
ined with the
revers
al of pr
e
viously tax
deductible
impai
rments. These same f
actors
also meant the Gro
up recogn
i
s
ed €699m of
previously unreco
gnised deferr
ed tax asset as t
he latest forecas
t show these losses will be used with
in 60 years. The Group pre
viously di
d not
recognise the
asset as the losse
s were forecast to
be use
d beyond 6
0 years
.
An incr
ease or decr
ease in th
e foreca
st income
in Luxembo
urg in each
year of 5%
-10% woul
d change th
e perio
d over wh
ich the loss
es wi
ll be
fully utilised by 2 to 5 years. The Group uses a change in forecas
t inco
me to underst
and the impact that a
change in int
erest r
ates or level of
debt adv
anced by th
e Luxembou
rg compani
es could h
ave on the re
covery
period of t
he losses.
Any future chan
ges in tax law, inclu
ding thos
e driven
by OECD, EU or domestic tax reform
s or the structure of the Grou
p could h
ave a signif
icant
effect on the use of the Luxembourg losses, includ
ing
the perio
d
over which the
se losses can
be utilised.
The Group has re
viewe
d the OECD
model rul
es and su
pportin
g comm
entary an
d does not
anticip
ate a si
g
nificant im
pact on its
ability to co
ntinue to use our l
osses in Luxem
bourg.
On the basis that future changes in tax laws are
un
known, th
e profit forecasts
assume that
existing tax laws
continue.
Based on the above factors the Group concludes that it is probab
le
th
at the
Luxembo
urg companies will continue to generate taxa
ble pro
fits in
the future agai
nst which it will
use these losses. In addition to the abov
e, €13,298
million (2021;
€12,
975 million) of the Group’s Luxembourg
losses ex
pire afte
r 12-17 ye
ars and n
o deferred tax
asset is r
ecognis
ed as they wil
l expir
e before we
can use these lo
sses. Th
e remaining lo
sses
do not expire. We
als
o have €9,136 million (2021:
€9,136 million) of Luxembourg losses in a
former Cable & Wireless Worldwide G
roup
company
, for which n
o deferre
d tax ass
et has been re
cognis
ed as it i
s uncertain
whether the
se losses
will be utili
sed.
Deferre
d tax a
sse
ts on
loss
es in Germany
The Group has tax l
osses of
€13,955 mill
ion (2021: €16,
296 million
)
in Germany ar
ising on the wr
ite down o
f investments in
Germ
any i
n 2000.
The losse
s are avail
able to use
against both
German fe
deral an
d trade tax li
abilities
and they do
not expir
e. A deferre
d tax as
set of
€2,1
70 million
(202
1: €2,529 m
illion) has be
en recognised
in respec
t of these loss
es as we con
clude it is p
robable tha
t the Germa
n business
wi
ll continue to
generate taxable
profits in the future agai
nst which we can ut
il
ise these losses
. The Group has review
ed the latest forecasts
for the German
business wh
ich incorpor
ate the unsy
stematic risks of
operat
ing in the t
elecomm
unicatio
ns busine
ss (see p
age 146). I
n the per
iod beyond
the 5
year forec
ast we ha
ve reviewed
the profit
s inherent i
n the termin
al perio
d and based o
n these and o
ur expect
ations for the G
erm
an bu
siness
we
believe it is probable the German losses will be fully utilised.
Based on the current forecasts the losses will be fully utilis
ed ov
er th
e ne
xt 4 t
o 8
years
. This perio
d has decre
ased comp
ared to the pr
ior year as a
result o
f restructur
ing the German
businesses
. A 5%-10
% chang
e in the
forecast profits of the Ger
man business
would alter the util
isation period by 1 year
.
Deferre
d tax a
sse
ts on
losses in Spain
The Group has tax losse
s of €4,627 million (2021: €4,334 million) whi
ch are available to offset against the
future profits of t
he G
rup
o Corp
ora
tivo
ONO busine
ss. The losses
do not expire
, and no deferre
d tax asset
is recognise
d for these loss
es due to th
e trading enviro
nmen
t in Spain
.
De
fer
red t
ax as
sets
in It
aly
The Group has a recognised deferred ta
x asset of €411 million (2021:
€162 million), including €71 milli
on (2021: €27 million) r
el
ating to tax
losses in It
aly. The deferr
ed tax asse
t increased in the ye
ar
following
a revalu
ation of the Ital
ian business
’s asset
s for tax
pur
poses. The Italian
business has historically been profitable and is forecasted to return to profitability, absent the impacts from the revaluation
of assets, in the sho
rt
term.
Other tax losses
The Group has lo
sses amount
ing to €8,444 mill
ion (2021
: €8,285 millio
n) in respect o
f UK subs
idiaries whi
ch are only ava
ilable
for offset agai
nst
future capital gain
s and since it
is uncertain
whether these loss
es will be utilised
, no deferred tax asset h
as been reco
gnised
, as
in the prio
r year.
The remaining lo
sses relate to
a number of othe
r jurisdiction
s
across the Group. There are also €2,365
mil
lion (20
21: €2,092 million) of
unr
ecog
nise
d temp
ora
ry di
ffer
ences
rela
ting
to tr
easur
y it
ems an
d ot
her it
ems.
Impact of climate risks
The recovery of the Group’s deferre
d tax assets is dependent on its forecasts of future profitability and th
e climate related r
isks i
dentified on
page 14
8 have been
consider
ed in the Gro
up’s ass
essment of th
e recover
y of those as
sets. The Gr
oup doe
s not expect
the climate
rel
ated risks
to have an
impact on th
e abilit
y of Luxe
mbourg to co
ntinue to p
rovide th
e internal fin
ancing,
procurem
ent, and ro
aming
activiti
es to o
ther
members of the Group.
Unremitted e
a
rnings
No deferred tax liability has been recognised in respect of a fu
rt
her €8,599 milli
on (2021: €7,
522 mil
lion) of unremi
tted ear
ni
ngs o
f subsid
iaries
because the Group is
in a position to control the t
iming of the
revers
al of the temporary diff
erence, and it is pro
bable that s
uch differences will
not reverse in the foreseeable futur
e. It is not practicab
l
e to estimate the amount of unrecognised deferred tax l
iab
ilities i
n res
pect of these
unremitted earnings.
Strategic report
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Financials
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158
Vodafone Group Plc
Annual Report 2022
7. Di
scontinu
ed oper
ations
and asset
s held f
or sale
The Grou
p classi
fies c
ertai
n of its as
sets th
at it exp
ects to di
spose as ei
ther di
sconti
nued oper
ations
or as
held
for sale.
The Grou
p classifie
s non-
current assets
and asset
s and li
abilities
within dis
posal gro
ups (‘assets’
) as hel
d for sale
if the as
s
ets are availabl
e
immediatel
y for sale in
their presen
t condition, m
anagement is
comm
itted to
a plan to s
ell the assets un
der usual term
s, it is
highly probable
that their
carrying
amounts
will be r
ecovered
princip
ally through
a sale
transaction r
ather than
through co
ntinuing use an
d the
sal
e is expected
to be completed within one year from the date of the initi
al classification.
Assets an
d liabilit
ies cla
ssified as h
eld for sal
e are pre
sented sep
arately
as current ite
ms in the
consolida
ted statem
ent of f
in
ancial pos
ition and
are meas
ured at the l
ower of their
carryin
g amount
and fair valu
e less c
osts to sell
. Property
, plant an
d equipmen
t and int
angi
ble a
ssets are not
depreciat
ed or amor
tised onc
e classifie
d as held fo
r sale; this
also appli
es in respect of
assets held
by equit
y accounted asso
ciates a
nd joi
nt
ventures.
Where operations constitu
te
a separately report
able segment (see
note 2 ‘R
evenue di
saggregat
ion and se
gmental
analysis’
) and ha
ve been
disposed of,
or are
classified as held for sa
le, the Group classifies such operations as discontinued.
Discontinued operations are exclu
ded from
the r
esults of con
tinuing o
peration
s and are pr
esented
as a sin
gle amount as
profit o
r lo
ss after t
ax
from di
scontinue
d operatio
ns in th
e Group conso
lidated
income st
atement. D
iscontin
ued operatio
ns are
also exclude
d from segm
ent
reporti
ng.
All other notes
to the financial statements include amounts
for co
ntinuing oper
ations, unless
indicated oth
erwise.
Disc
ontinu
ed oper
ations
The Group did not h
ave any discontinued o
perations in the year
ended 31 March 202
2
or the com
parative y
ears ended 31 March 2021
an
d 31
March 2020.
Assets
held for
sale
Assets held
for sale at 3
1 March 2022
comprise the Group’s 21.
0%
interest in Indu
s Towers (20
21: 28.1%).
The Group’s intere
st i
n In
dus
Towe
rs
has been provide
d as security against both cer
tain bank borrowing
s (see note 21 ‘
Borrowings’) and partly to the ple
dges provide
d to the n
ew
Indus Tower
s entity under the term
s of the
mer
ger between erstwhile I
ndus Towers and Bhart
i Infratel (see note 29 ‘Contingent l
iabili
ties
and
legal pro
ceedings’
).
The
rel
evan
t ass
ets a
re d
etai
led
in the
tab
le
below
.
2022
2021
€m
€m
Non-curren
t assets
Investments in associates and joint ventures
959
1,257
Assets held for sale
959
1,257
Strategic report
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Financials
Other information
159
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
8. Ear
nings per
share
Basic ear
nings per sh
are is the
amount of pr
ofit gener
ated for the fi
nancia
l year attr
ibutable t
o equity
shar
eholders di
vided by t
he weig
hted aver
age num
ber of s
hares in is
sue duri
ng the y
ear.
2022
2021 2020
Millions
Millions Millions
Weighted average number of share
s for basic earnings per share
29,012
29,592
29,422
Effect of dilutive potential shares:
restricted shares and share options
97
91
–
Weighted average number of shares
for diluted earnin
gs per share
29,109
29,683
29,422
2022
2021
2020
€m
€m
€m
Profit/(loss) for earnings per sha
re from continuing operations
2,088
112
(920)
Profit/(loss) for basic and
diluted earnings per share
2,088
112
(920)
eurocents
eurocents
eurocents
Basic earnings/(loss) per sha
re from continuing operations
7.20
c
0.38
c
(3.13)c
Basic earnings/(loss) per share
7.20c
0.38c
(3.13)c
eurocents
eurocents
eurocents
Diluted earnings/(loss) per share from continuing operations
7.17c
0.38c
(3.13)c
Diluted earnings/(loss) per share
7.17c
0.38c
(3.13)c
9. Equit
y dividend
s
Dividends a
re one type of
sha
reholder return
,
histo
rically paid to
our shareholders in
February and August.
2022
2021 2020
€m
€m
€m
Declared
during the financial
year
Final dividend for the year ended 31
March 2021: 4.
50
eurocents per
share
1,254
1,205
1,112
(2020: 4.50 eurocents per share, 2019: 4.16 eurocents per share)
Interim dividend for the year ende
d 31
March 2022: 4.50 eurocents per share
1,229
1,207
1,205
(2021: 4.50 eurocents per share,
2020: 4.50 eurocents per share)
2,483
2,412
2,317
Proposed after the end of the year
and n
ot recog
nised as a liability
Final dividend for the year ended 31
March 2022: 4.
50 eurocents per share
1,265
1,260
1,205
(2021: 4.50 eurocents per share,
2020: 4.50 eurocents per share)
Strategic report
Governance
Financials
Other information
160
Vodafone Group Plc
Annual Report 2022
10. I
ntang
ibl
e asse
ts
The sta
tement of fina
ncial position
contains sign
ificant intangibl
e assets, mainly in
relation
to goodwill and
licen
ces and s
pectrum
. Goodwi
ll, whi
ch arises
when w
e acquire a bu
sines
s and pa
y a higher
amount t
han
the fair va
lue of its net ass
ets primaril
y due to the sy
nergies we ex
pect to creat
e, is not amor
tised but i
s
subject
to annu
al imp
airment re
views. Li
cences
and sp
ectr
um are amorti
sed over the lif
e of the li
cence. For
furthe
r details see ‘Critical acc
ounting judgemen
ts and key sources of
estimation unce
rtainty’ in note
1
‘Basi
s of prep
arati
on ‘ to t
he cons
olidated
finan
cial st
ateme
nts.
Accounting policies
Identifiabl
e intangible asset
s are recognised
when the Grou
p c
ontrol
s the asset, it is probable that future economic benefits a
ttributed to th
e
asset wil
l flow to the
Group an
d the cost of
the asset
can be reli
ably measur
ed. Ident
ifiabl
e intangi
ble asset
s are reco
gnised at f
air valu
e when
the Group com
pletes a bu
siness co
mbinatio
n. The determinat
ion of
th
e fair values o
f the separ
ately identi
fied intangi
bles, is
b
ased, to a
considerable extent
, on management’s judgement
.
Goodwill
Goodwill ar
ising on th
e acquisitio
n of an entity repr
esents the
exce
ss of the cost
of acquisi
tion over the
Group’s intere
st in
the net fair value of
the identif
iable ass
ets, liabil
ities an
d
contingent l
iabiliti
es of the entity r
ecognise
d at the date of
acquisitio
n.
Goodwill
is initially
recognis
ed as an
asset at co
st and is su
bse
quently measur
ed at cost le
ss any accumul
ated impairment loss
e
s. Goodwill is
not subject to a
mortisation
but is tested fo
r impairmen
t annua
lly or whenever there is e
vidence th
at it may be i
mpaired. Goodwi
ll is
denominate
d in the currency o
f the acquired
ent
ity and re
valued to
the closin
g exchan
ge rate at e
ach repor
ting period
date.
Negative g
oodwill arising on a
n acquisition i
s
recogn
ised directl
y in the income
statement.
On dispo
sal of a su
bsidiary or
a joint arran
gement, the attr
ibutable amo
unt of good
will is includ
ed in the de
termination o
f the
profit or loss
recognis
ed in the i
ncome statem
ent on di
sposal.
Finite lived intangible assets
Intan
gible asse
ts with finit
e lives ar
e stated
at acquisit
ion or devel
opment co
st, less
accumulate
d amortisa
tion. The
amortisat
ion pe
riod and
method is revi
ewed at least annuall
y. Changes in th
e expected us
eful li
fe or the expected pattern of con
sumption of future econ
omic benefits
embodie
d in the asset
are acco
unted for by
changin
g the amo
rtisation
period or
method, a
s appropr
iate, an
d are treated
as chang
es in
accounting esti
mates.
Licence and spectrum fees
Amortisation periods for licence and spectrum fees
are determ
ined primarily by referen
ce to the unexpired licence
period, the conditions for
licence renewal and whether licences are dependent on specif
ic
t
echnologie
s. Amortis
ation is charged to the inc
o
me s
t
atement on
a
straight
-
line basis over the estimated useful
lives from the commencement of related network services.
Computer software
Computer so
ftware co
mprises so
ftware pur
chased fr
om third pa
rties
as well as the cost of internally developed software. Compute
r softwa
re
licences
are capital
ised on the
basis of the co
sts incurr
ed to
acquir
e and bring
into use the sp
e
cific sof
tware. Cos
ts that
are directly
associ
ated
with the production of identifiable and unique software products
controlled by
the Group, and are p
robable of producing
future
economic
benefit
s, are re
cognise
d as intan
gible as
sets. Direc
t costs of
softwar
e developme
nt inclu
de employee co
sts and dir
ectly attr
ibu
table ov
erhead
s.
Softwar
e integral to an item of har
dware equip
ment is classif
ied as property
, plant and equipm
ent.
Costs assoc
iated with maintainin
g soft
ware pro
grams are re
cognis
ed as an ex
pense when
they are in
curred.
Amortisat
ion is ch
arged to the in
come st
atement on a str
aight-l
ine
basis over the e
stimated useful life fro
m the date the softw
are is availab
le for
use.
Other intangible asset
s
Other intangi
ble assets, inclu
ding
br
ands and cu
stomer b
ases, are
recor
ded at fair
value at th
e date of ac
quisition
. Amortisat
ion is char
ged to th
e
income st
atement, over the e
stimated useful l
ives of int
angible asse
ts from the date th
ey are availa
ble for use, on a s
traight-
line basis. The
amortisation basis adopted for each class of intangible asset reflects t
he Group
’
s c
on
sumption of the economic benefit from tha
t asset.
Estimated useful lives
The estimated useful lives of finite lived int
angi
ble asset
s a
re as follows:
– Licence and spectrum fees
3 - 40 years
– Computer software
3 - 5 ye
ars
– Brands
1 - 10 years
– Customer bases
2 - 32 years
Strategic report
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Financials
Other information
161
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
10. In
tangib
le ass
ets (con
tinue
d)
Licence and
Computer
Customer
Goo
dwill
spectr
um fees
1
software
bases
Other
Total
€m
€m
€m
€m
€m
€m
Cost
1 April 2020
99,170
32,691
16,768
11,964
453
161,046
Exchange movements
107
234
43
144
11
539
Arising on acquisition
87
–
–
200
–
287
Additions
–
896
2,462
1
8
3,367
Disposals
–
(293)
(1,651)
(1)
(2)
(1,947)
Other
–
–
211
–
(4)
207
31 March 2021
99,364
33,528
17,833
12,308
466
163,499
Exchange movements
(21)
(148)
(60)
80
1
(148)
Arising on acquisition
(10)
–
–
54
–
44
Additions
–
901
2,727
–
7
3,635
Disposals
–
(356)
(2,823)
–
(1)
(3,1
80)
Other
–
1
36
–
(10)
27
31 March 2022
99,333
33,926
17,713
12,442
463
163,877
Accumulated impairment losses and
amortisation
1 April 2020
67,792
20,360
11,737
6,705
443
107,037
Exchange movements
(159)
255
3
131
11
241
Amortisation charge for the year
–
1,721
2,210
488
2
4,421
Disposals
–
(293)
(1,643)
–
(1)
(1,9
37)
Other
–
–
189
–
(1)
188
31 March 2021
67,633
22,043
12,496
7,324
454
109,950
Exchange movements
(184)
(35)
(72)
70
1
(220)
Amortisation charge for the year
–
1,306
2,225
509
4
4,044
Disposals
–
(351)
(2,821)
–
(1)
(3,1
73)
Other
–
–
39
–
(7)
32
31 March 2022
67,449
22,963
11,867
7,903
451
110,633
Net book value
31 March 2021
31,731
11,485
5,337
4,984
12
53,549
31 March 2022
31,884
10,963
5,846
4,539
12
53,244
Note:
1 Includes €229
million in relati
on to licences a
nd spectrum issued in
the UK, which was set
tled from a deposit
made in the y
ear
ended 31 March 2021 a
s part of the auction proc
ess. The
consolidated statement
of cash flows fo
r the year ended
31 March 2022 includes a
return of €16
7 million in relatio
n to the port
ion of the deposit refunded.
For licence
s and spectrum fe
es and other int
angible asse
ts, amortisat
ion is incl
uded within the
cost of sale
s line with
in the c
onsolidated in
come
statement
. Included in the net book
value of com
puter software are as
sets in the course of constr
uction, w
hich are not deprec
ia
ted, with a cost
of €1,95
5m (2021:
€1,541m).
The net book value and expiry dates of the most significant licences are as follows:
2022
2021
Expiry
dates
€m
€m
Germany
2025/20
33/2040
3,270
3,564
Italy
2029/2037
3,415
3,429
UK
2023/2033/
2038/2041
1,209
1,383
Spain
2028/20
30/2031/2
038/2041
809
567
The remaining amor
tisation period f
or each of the licen
ces in
the table
above corresponds to the ex
piry date of the respe
ctive
lic
enc
e. A
summary of the Grou
p’s most
significant s
pectrum licence
s can be fou
nd on page 247.
Strategic report
Governance
Financials
Other information
162
Vodafone Group Plc
Annual Report 2022
11. Pr
operty, plant
and equipment
The Group makes sign
i
fican
t investments in network equipment and infrastruc
t
ure – th
e base stations and
techno
logy required to
operate our n
etworks – that form
the majority of
our tangible
assets. All asse
ts are
deprecia
ted over their useful eco
nomic lives. For furthe
r details on t
he estimation
of useful eco
nomic live
s,
see ‘Critic
al accounting judgemen
ts and key sources of
estimation unce
rtainty’ in note 1 ‘Basis o
f
prepar
ation ‘t
o the conso
lidated fi
nanci
al statem
ents.
Accounting policies
Land an
d buildin
gs held fo
r use are stat
ed in the s
tatement of f
inanci
al positio
n at their co
st, les
s any accu
mulated de
preciat
ion an
d any
accumul
ated impair
ment losses.
Amounts fo
r equipmen
t, fixture
s and fitt
ings, wh
ich includes
network i
nfrastru
cture asse
ts are state
d at cos
t less ac
cumulated
deprec
iatio
n and
any accu
mulated imp
airment losse
s.
Assets in th
e course of
constru
ction are car
ried at
cost, less
any recog
nised impairm
ent losses. De
preciation o
f these assets c
ommen
ces when
the assets ar
e ready for their in
tended use.
The cost o
f property
, plant
and equi
pment incl
udes direc
tly attri
butable incr
emental co
sts incur
red in thei
r acquisit
ion and in
stallation.
Depreci
ation is ch
arged so
as to wri
te off the co
st of asset
s,
other th
an land, using the stra
ight-line method, over the
ir esti
mated useful lives, as
follows:
Land and buildings
– Freehold buildings
25 - 50 years
– Leasehold premises
the term o
f the lease
Equipment, fixtures and fittings
– Network infrastructure and othe
r
1 - 35 years
Depreciation is not provided on fre
ehold land.
Right-of-use assets arising from the Group’s lease arrangements
are
depreci
ated over their r
easonably
certain l
ease term
, as de
ter
mined under
the Grou
p’s lease
s policy (
see note 20 ‘
Leases’ an
d ‘Critic
al accou
nting jud
gements and
key sources of
esti
mation uncer
tainty’
in note 1 f
or
details)
.
The gain or loss arising on the disposal, retirement or granting of a finance lease on an item of property, plant and equipment
is determ
ined as
the difference between any proceeds from sale or receivables arising on a lease and the carrying amount of the asset and is rec
ogn
ise
d i
n t
he
income st
atement.
Strategic report
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Financials
Other information
163
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
11. Pro
perty, plant and
equipment
(continued)
E
quipment,
Land and
fix
tures
buildings
and fittings
Total
€m
€m
€m
Cost
1 April 2020
2,261
72,305
74,566
Exchan
g
e movements
25
188
213
Arisin
g
on ac
q
uisition
74
19
93
Additions
47
5,666
5,713
Dis
p
osals
(100)
(2,512)
(2,
612)
Other
8
308
316
31 March 2021
2,315
75,974
78,289
Exchan
g
e movements
1
(265)
(264)
Arisin
g
on ac
q
uisition
(74)
44
(30)
Additions
41
5,845
5,886
Dis
p
osals
(200)
(2,280)
(2,
480)
Other
263
2
265
31 March 2022
2,346
79,320
81,666
Accumul
ated depreciation and
impairment
1 April 2020
1,269
44,933
46,202
Exchan
g
e movements
8
114
122
Char
g
e for the
y
ear
39
5,727
5,766
Dis
p
osals
(97)
(2,448)
(2,545)
Other
(3)
77
74
31 March 2021
1,216
48,403
49,619
Exchan
g
e movements
3
(171)
(168)
Char
g
e for the
y
ear
117
5,740
5,857
Dis
p
osals
(191)
(2,240)
(2,
431)
Other
224
(223)
1
31 March 2022
1,369
51,509
52,878
Net book value
31 March 2021
1,099
27,571
28,670
31 March 2022
977
27,811
28,788
Include
d in the net
book val
ue of land an
d build
ings and e
quipment, f
ixtures
and fittin
gs are as
sets in the c
ourse of con
struct
io
n, which ar
e not
depreciated,
with a cost of €12 million (2021:
€15
million) and €2,353 million (2021:
€2,2
43 million) respectively. Also includ
ed in
the b
ook
value of equipment
, fixtures and fitti
ngs are assets leas
ed out
by the Group under ope
rating leases, with
a cost of €2,998 mill
ion (2021: €2,
930
million), accum
ulated depreciation of €2,050 million (2021: €1
,828 million) and net book value of €948 milli
on (2021: €1,102 mi
llion).
Right-of-use as
sets arising from the
Group’s lease arrange
ments are recorde
d within property, plant
and equipment:
2022
2021
€m
€m
Pro
p
ert
y
,
p
lant and e
q
ui
p
ment (owned assets)
28,78
8
28,670
Ri
g
ht-of-use assets
1
12,016
12,573
31 March
40,804
41,243
Note:
1 Additions
of €3,828 million (2021:
€5,306 million) and a d
epr
eciation char
ge of €3,944 million (
2021: €3,914 million) were
recorded in respec
t of right-of-use asse
ts during t
he year to 31 March
2022.
Strategic report
Governance
Financials
Other information
164
Vodafone Group Plc
Annual Report 2022
12. Investments
in associa
t
es and joint arrangements
The Group holds interests in associates in Kenya and in In
di
a, whe
re we have significant in
fluence, as well as
in a nu
mber of joi
nt arr
angeme
nts in t
he UK, It
aly,
the Netherlands, India and Austra
lia, where we share
control with on
e or more third
parties. For f
urther details see ‘Critic
al accountin
g
judgem
ents and key
sour
ces of esti
matio
n uncer
taint
y’ in not
e 1 ‘Basi
s of pr
eparati
on ‘to t
he co
nsoli
dated fin
anci
al statem
ents.
Accounting policies
Interests in joint arrangements
A joint arrange
ment is a contractu
al arrange
ment whereby the Group a
nd other parties und
ertake an econ
omic activity that is su
b
ject to joint
control
; that is, wh
en the rele
vant activit
ies that si
gnifican
tly
affect the invest
ee’s returns require
the unanimous con
sent o
f the partie
s sharin
g
control. Joint arrangement
s
ar
e either
joint operat
ions or joint
ventures.
Gains or losses resulting from the contribution or sale of a subs
idiary as par
t of the formation of a jo
int arrangement ar
e rec
ognise
d in respect
of
the Group’s entire
equity holding in
the subsidiary.
Joint operations
A joint oper
ation is a joi
nt arran
gement wher
eby the parti
es that have joint cont
rol have the rights to t
he assets, and obli
gat
ions for the liabili
ties,
relating to the arran
gement or that other fa
cts and cir
cumstances in
dicate
that th
is is the c
ase. The Group’
s share of as
sets, liabil
ities, reve
nue,
expenses and cash flows are combined with the equivalent items in th
e financial statements on a line-by-line basis.
Any goodwil
l arising on
the acquisit
ion of the Group’
s intere
st
in a joint
operation i
s accounte
d for in ac
cordan
ce with the Gr
o
up’s accoun
ting
policy fo
r goodwil
l arisin
g on the acquis
ition of a su
bsidia
ry.
Joint ventures
A joint ven
ture is a jo
int arrang
ement where
by the partie
s that have
joint cont
rol have
the rights to th
e net ass
ets of the arr
angement
.
At the date of
acquisition,
any exces
s of the cost of acqu
isit
ion over th
e Group’s share of the n
et fair value of the id
entifia
ble a
ssets, li
abilities
and
contingent l
iabiliti
es of the joint
venture is reco
gnised as go
od
will. The goodwill is included within the carrying amount of t
he invest
ment.
The results a
nd assets and l
iabiliti
es of joint venture
s, other th
an those joint ven
tures or part thereof that a
re held for sale (see note 7
‘Disco
ntinued o
peration
s and asset
s and liabil
ities hel
d for sale’
), are in
corporate
d in the con
solidate
d finan
cial statemen
ts
using th
e equity
method of accounti
ng. Under the e
quity method, in
ve
stments in join
t ventures are
carried in the
consolidated statement of financial position
at
cost adjust
ed for post-acquisit
ion changes in
the Grou
p’s share of the
net assets of
the joint ventur
e,
le
ss any impairment in
the value of the
investment. The Group’s share of post-tax profits or losses are re
cognis
ed in the conso
lidated in
come stat
ement. Losses of
a jo
int venture in
excess of the Gro
up’s inte
rest in that joint
venture are re
cognise
d only to the extent that the Group has incurred legal or con
structive obligations
or made payments on behalf of the j
oint venture.
Associate
s
An associ
ate is an entity
over which
the Group has sign
ificant
in
fluence and th
at is neither
a subsid
iary nor an interes
t in a
joint arran
gement.
Signifi
cant influen
ce is the po
wer to parti
cipate in th
e financia
l and operatin
g policy decisions of
the investe
e
but where the
Grou
p does not
have control
or joint control over
those policies.
At the date of
acquisition,
any exces
s of the cost of acqu
isit
ion over th
e Group’
s share of the
net fa
ir value of the identif
ia
ble asse
ts, liab
ilities
and con
tingent l
iabilitie
s of the as
sociate i
s recogn
ised as go
odwill. Th
e goodwil
l is incl
uded within th
e carr
ying amount o
f t
he investment
.
The results and
assets
and lia
bilities
of associ
ates are in
corpor
ated in the co
nsoli
dated f
inancial state
ments usin
g the same equity method of
accounti
ng
u
sed for joint ventures
, described above
.
Joint operations
The Company’
s princip
al joint oper
ation has shar
e capit
al consisti
ng
solely of ordinary sha
res and is indirectly
held, and prin
cipa
lly operates
in
the UK. The financial and operatin
g
ac
t
ivities of the operation are jointly controlled
by the participating shareholders and ar
e pr
imarily designe
d
for all
but an insi
gnificant
amount o
f the o
utput to be consume
d by the shareholders
.
Country of
incorporation or
registration
Percent
age
shareholding
1
Percent
age
shareholding
1
Name of joint operation
Principal activity
2022
2021
Cornerstone Telecommunications Infrastructure Limited
Network infrastructure
UK
50.0
50.0
Note:
1
Effective
ownership perc
entages of Voda
fone Group
Plc r
ounded to the
nearest tenth o
f one percent.
Strategic report
Governance
Financials
Other information
165
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
12. Inv
estments in a
ssociates and
joint arr
angements (continu
ed)
Joi
nt vent
ures and as
sociat
es
2022
2021
€m
€m
Investments in
j
oint ventures
3,781
4,249
Investments in associates
487
421
31 March
4,268
4,670
Joint ventures
The financial and operating activities of the Group’s joint
ventures are jointly controlled by the participating shareholders.
The
partic
ipati
ng
shareholders ha
ve rights to the net
assets of the join
t ventur
es through their e
quity shareholdings.
Unless otherwise stat
ed, t
he Company’s
princi
pal joint
ventures al
l have sh
are capital
consist
ing solel
y of ordin
ary shar
es and ar
e all indi
rectly
held. The coun
try o
f incorporation or
registratio
n of all join
t ventures is
also their
principal pl
ace of operat
ion.
Country of
incorporation or
registration
Percent
age
shareholdings
1
Percent
age
shareholdings
1
Name of jo
int venture
Principal activit
y
2022
2021
Infrastructture Wireless Italiane (INWIT) S.
p
.A.
2
Network infrastructure
Ital
y
33.2
33.2
VodafoneZi
gg
o Grou
p
Holdin
g
B.V.
Network o
p
erator
Netherlands
50.0
50.0
TPG Telecom Limited
3
Network o
p
erator
Australia
25.1
25.1
Vodafone Idea Limited
4
Network o
p
erator
India
47.6
44.4
Notes:
1
Effective
ownership perc
entages of Vodafone
Group
Plc r
ounded to the
nearest tenth of o
ne percent.
2
At 31
March 2022 the fair val
ue of the Group’s in
terest in
INWIT S.p.A. was €3,238 mil
lion (2021: €3
,026 million) based on the quo
ted share price on the Milan
Stock Exchange.
3
At 31
March 2022 the fair val
ue of the Group’s
interest in TP
G Telecom Limited was AUD
2,818 million (€1,902 mi
llion) (2021:
AUD 2,948 million (€1,911 mil
lion)) based on the quoted s
hare price
on ASX.
4
At 31
March 2022 the fair val
ue of the Group’s in
terest in Vodafone
Idea Limited wa
s INR 148 billion (€1,750 mil
lion) (2021:
INR 118 billion (€1,373
million)) based on the quoted sha
re price on
the Natio
nal Stock Exch
ange of India.
Vodafon
e Idea Li
mited
The Group’s carrying
value in Vodafone Ide
a Limited (‘VIL’) redu
ce
d to €ni
l at 30 Septem
ber 2019. T
he Group’s sha
re of VIL’s lo
sses not
recogn
ised at 31 Mar
ch 2022 is €5,1
20 million (31
March 2021:
€3,562 mil
lion). Significan
t uncertainti
es exist in relati
on to V
IL’s a
bility to
generate th
e cash flow it r
equires t
o settle or its
ability to r
efinance it
s liabilitie
s and guar
antees as
they fall due (s
ee note 29 ‘Contingent
liabilities a
nd legal proceedings’).
The value of the Group’s 21.0% shareholding i
n Indu
s Towers Limite
d is, in
part, de
pendent on
the in
come gener
ated by In
dus Tow
er
s Limited
from tower r
entals to major
customers, in
cluding VIL. Any
inability of th
ese major custo
mers to pay such a
mounts in the future
may result
in an
impairment
in the carryin
g value (3
1 March 2022: €
1.0 billion
) of the Group’s
investment in
Indus Towers
Limited.
TP
G Tele
com Li
mite
d
TPG Telecom
Limited i
s listed on th
e Australi
an Securitie
s Exchan
ge (‘A
SX’). Vodafon
e and Hu
tchison Te
lecommunica
tions (Austr
al
ia) Limite
d
each own an economic interest of 25.05%, with the rem
aining 49.9% listed as free float on the ASX. The f
inancial information pr
esented in the
tables bel
ow includes de
bt held within the str
u
cture that hol
ds the Group’s
interest in TPG.
The following table provides aggregated f
inancial information for the Group’s joint ventu
res as it relates to the amounts recog
nised in
the
income st
atement, state
ment of compreh
ensive
incom
e and state
ment of finan
cial posit
ion.
INWIT S.p.
A.
Financial information presented for INWIT S.p.A. for the years to 31 March 2022 and
31 March 2021 is based on INWIT S.p.A’s fin
ancial
res
ults
and
financial p
osition as a
t 31 Decemb
er 2021 and
31 Decemb
er 2020, resp
ectively,
being the la
test finan
cial infor
mation avai
la
ble t
o the
Group on
completin
g the finan
cial state
ments for ea
ch year.
Investment in joint ventures
Profit/
(loss) fr
om
conti
nuing oper
ations
2
2022
2021
2022
2021 2020
€m
€m
€m
€m €m
INWIT S.p.A.
2,851
2,920
27
3
–
VodafoneZiggo Group
Holding
B.V.
822
1,190
(19)
(232)
(64)
TPG Telecom Limited
1
84
104
(5)
98
(35)
Indus Towers Limited
–
–
–
–
19
Vodafone Idea Limited
–
–
–
–
(2,546)
Other
24
35
(14)
(15)
(125)
Total
3,781
4,249
(11)
(146)
(2
,751)
Notes:
1
Amoun
ts presented reflec
t Vodafone Hutc
hiso
n Australia
Pty Limited resu
lts only until
the date of the merger
with TPG Telecom
Limited on 26 June
2020, subsequent of which the
combined
results are presented.
2
T
otal Other comprehe
nsive (expense
)/inco
me is
not materially d
ifferent to pro
fit/(loss
) from conti
nuing operation
s.
Strategic report
Governance
Financials
Other information
166
Vodafone Group Plc
Annual Report 2022
Summarised financial
information
Summarised f
inancial infor
mation f
or each of the Grou
p’s materi
al
joint ventures o
n a 100% ownershi
p basis i
s set out below.
Financial informat
ion presented for the year
to
, and as at 31
Marc
h 2021, has been updated to reflect the release of full year
fina
ncia
l
information
by VIL.
As discl
osed above, the Group’s invest
ment in
VIL was redu
ced to €n
il in the yea
r ended 3
1 March 202
0 and t
he Group h
as
not recorded
any profit or
loss in respe
ct of its sh
are of VIL’s resul
ts since th
at date.
INWIT S.p.A.
VodafoneZ
iggo Group Hol
ding B.V.
2022
2021 2020
2022
2021 2020
€m
€m €m
€m
€m €m
Income statement
Reven
ue
785
562
–
4,056
4,010
3,948
Operating expenses
(70)
(46)
–
(2,104)
(2,
058)
(2,163)
Depreciation and amortisation
(513)
(398)
–
(1,592)
(1,
658)
(1,528)
Other income
–
–
–
–
25
–
Operating profit
202
118
–
360
319
257
Interest income
–
–
–
–
–
–
Interest expense
(90)
(101)
–
(276)
(658)
(343)
Profit/(loss) before tax
112
17
–
84
(339)
(86)
Income tax expense
(30)
(7)
–
(121)
(125)
(42)
Profit/(loss) from cont
inuing operations
1
82
10
–
(37)
(464)
(128)
TPG Telecom Limited
Vodafone Idea Limited
2022
2021 2020
2022
2021 2020
€m
€m €m
€m
€m €m
Income statement
Reven
ue
3,375
3,010
2,108
4,450
4,847
5,704
Operating expenses
(2,292)
(2,
096)
(1,489)
(2,802)
(3,
133)
(4,938)
Depreciation and amortisation
(914)
(769)
(508)
(2,390)
(2,
442)
(2,426)
Other income
–
–
–
(34)
(2,135)
(6,627)
Operating profit/(loss)
169
145
111
(776)
(2,863)
(8,287)
Interest income
–
1
4
14
32
147
Interest expense
(122)
(201)
(256)
(2,297)
(2,
035)
(1,740)
Profit/(loss) before tax
47
(55)
(141)
(3,059)
(4
,866)
(9,880)
Income tax (expense)/credit
(27)
495
–
2
–
–
Profit/(loss) from cont
inuing operations
1
20
440
(141)
(3,057)
(4
,866)
(9,880)
Note:
1
Tota
l Other comprehensive
income/(expe
nse) is not materia
lly
different
to profit/(lo
ss) from con
tinuing op
erations.
Strategic report
Governance
Financials
Other information
167
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
12. Inv
estments in a
ssociates and
joint arr
angements (continu
ed)
INWIT
S.p.A.
VodafoneZ
iggo Group Hol
ding B.V.
2022
2021
2022
2021
€m
€m
€m
€m
Statement of financial position
Non-current assets
14,532
14,422
16,521
16,978
Current assets
270
256
739
911
Total assets
14,802
14,678
17,260
17,889
Equity shareholders’ funds
8,595
8,801
1,643
2,380
Non-current liabilities
5,672
5,536
13,187
13,025
Current liabilities
535
341
2,430
2,484
Cash and cash equivalents within current assets
96
120
190
330
Non-current liabilities excluding trad
e and other payabl
es and provisions
5,420
5,314
13,007
12,466
Current liabilities excluding trade and
other payables
and provisions
319
185
1,282
1,154
TPG Telecom Limited
Vodafone Idea Limited
1
2022
2021
2022
2021
€m
€m
€m
€m
Statement of financial position
Non-current assets
10,638
10,272
17,267
17,975
Current assets
898
679
2,693
2,648
Total assets
11,536
10,951
19,960
20,623
Equity shareholders’ funds
3,129
3,121
(10,214)
(7,457)
Non-current liabilities
7,227
6,884
23,266
20,769
Current liabilities
1,180
946
6,908
7,315
Cash and cash equivalents within current assets
435
268
365
260
Non-current liabilities excluding trad
e and other payabl
es and provisions
7,173
6,825
23,241
14,187
Current liabilities excluding trade and
other payables
and provisions
121
83
3,334
3,914
Note:
1
Includes
certain amounts subject to an
adjustment mechan
ism agreed as part of th
e formation of Vodafone Idea Li
mited. See note
29 ‘Contingent
liabilities and legal proceeding
s’ for more
deta
il.
The Group received dividends in th
e year
en
ded
31 Mar
ch 202
2 from VodafoneZiggo Group Holding B.V. of €350 million (2021: €209
mill
ion,
2020: €148
million) , from INWIT S.p.A of €96 million (2021: €42
million, 2020: €nil) and from TPG Telecom Ltd of €2
2 million (
202
1: €nil, 2020
:
nil).
Strategic report
Governance
Financials
Other information
168
Vodafone Group Plc
Annual Report 2022
Reconciliation of summar
is
ed
financial information
The reconcil
iation of su
mmarised fi
nancial inform
ation presente
d
to the carry
ing amount of
our interest in
joint ventures i
s se
t out below:
INWIT S.p.A.
VodafoneZ
iggo Group Hol
ding B.V.
2022
2021
2020
2022
2021 2020
€m
€m
€m
€m
€m €m
Equity shareholders’ funds
8,595
8,801
1,643
2,380
Interest in joint ventures
1
2,851
2,920
822
1,190
Carrying value
2,851
2,920
822
1,190
Profit/(loss) from continuing operations
82
10
–
(37)
(464)
(128)
Share of profit/(loss)
1
27
3
–
(19)
(232)
(64)
Share of profit/(loss)
27
3
–
(19)
(232)
(64)
TPG Telecom Limited
Vodafone Idea Limited
2022
2021
2020
2022
2021 2020
€m
€m
€m
€m
€m €m
Equity shareholders’ funds/(deficit)
3,129
3,121
(10,214)
(7,457)
Interest in joint ventures
1
27
50
(4,863)
(3,
310)
Impairment
–
–
(257)
(252)
Goodwill
57
54
–
–
Investment proportion not recognised
–
–
5,120
3,562
Carrying value
84
104
–
–
Profit/(loss) from continuing operations
20
440
(141)
(3,057)
(4,
866)
(9,880)
Share of (loss)/profit
1
(5)
98
(70)
(1,357)
(2,
160)
(4,386)
Share of loss not recognised
–
–
35
1,357
2,160
1,840
Share of (loss)/profit
1
(5)
98
(35)
–
–
(2
,546)
Note:
1
The Group
’s effective
ownership percentages
of Vodafone Id
ea Li
mited, Vo
dafoneZiggo Gr
oup Holding B.V., Inwit S
.p.A. and TPG
Telecom Limited
are 47.6%, 50.0%,
33.2% and 25.1% respectively,
rounded to
the nearest tent
h of one perc
ent.
Associates
Unless o
therwis
e stated,
the Comp
any’s prin
cipal
associat
es all ha
ve share
capital co
nsistin
g solely
of ordi
nary shar
es and are
all indirectl
y held.
The count
ry of incor
poration o
r regi
stration of al
l associ
ates is al
so their
principal
place of
operatio
n.
Country
of Pe
rcentage Pe
rcentage
incorporation
or
sh
areholding
1
shareholding
1
Name of associate
Principal
activity
registration 2022 2021
Indus Towers Limited
2
Network
infrastructure
India
21.0
28.1
Safaricom PLC
3
Network
o
p
erator Ken
y
a 40.0
40.0
Notes:
1
Effective
ownership perc
entages of Voda
fone Group
Plc r
ounded to the
nearest tenth o
f one percent.
2
At 31
March 2022, the fair val
ue of the Group’s in
terest in Indus T
owers Limited was INR 126 bi
llion (€1,494 milli
on) (2021:
INR 186 bi
llion (€2,161 million
)) based on the closin
g quoted share price
on the N
ational Stock Exch
ange of India.
3
At 31
March 2022, the fair val
ue of the Group’s in
terest in Safaric
om PLC was KES 546 billion
(€4,270 million) (2021:
KES 580
bil
lion (€4,513 mi
llion)) based o
n the closin
g quoted share pr
ice on
the Nair
obi Stock Exch
ange. The Group al
so holds two non
-voting shares.
The tables below and overleaf provide aggregat
ed finan
cial i
nforma
tion for the Grou
p’s ass
o
ciates as it relates to the amounts
recogn
ised in th
e
income st
atement, state
ment of compreh
ensive incom
e
and consolidated statement of financial position.
Investment in associa
tes
Profit from continuing operations
1
2022
2021
2022
2021 2020
€m
€m
€m
€m €m
Safaricom PLC
428
421
217
217
247
Indus Towers Limited
1
–
–
–
274
–
Other
59
–
5
(3)
(1)
Total
487
421
222
488
246
Note:
1. Indus Towers Limited was classified as held for sale at
31 March 2022
and 31 March 2021. See note 7 'Discontinue
d operatio
ns and assets held for sale'.
Strategic report
Governance
Financials
Other information
169
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
12. Inv
estments in a
ssociates and
joint arr
angements (continu
ed)
Safaricom P
LC
Indus Towers Limited
2022
2021 2020
2022
2021 2020
€m
€m €m
€m
€m €m
Income statement
Reven
ue
2,318
2,083
2,310
3,122
2,421
2,365
Operating expenses
(1,164)
(1,
030)
(1,122)
(1,480)
(1,247)
(1,336)
Depreciation and amortisation
(309)
(299)
(295)
(598)
(477)
(268)
Other income/(expense)
–
–
–
–
412
(592)
Operating profit
845
754
893
1,044
1,109
169
Interest income
9
12
26
–
61
32
Interest expense
(59)
(27)
(18)
(140)
(194)
(196)
Profit before tax
795
739
901
904
976
5
Income tax (expense)/credit
(270)
(197)
(282)
(272)
(168)
39
Profit from continuing operations and total
comprehens
ive income
525
542
619
632
808
44
Attributable
to:
- Owners of the parent
542
542
619
632
808
44
- Non-controlling interests
(17)
–
–
–
–
–
Statement of financial position
Non-current assets
2,173
1,333
5,359
5,271
Current assets
510
438
1,685
1,198
Total assets
2,683
1,771
7,044
6,469
Equity shareholders' funds
1,066
1,045
3,774
3,083
Non-controlling interests
312
–
–
–
Non-current liabilities
558
131
2,101
1,936
Current liabilities
747
595
1,169
1,450
Cash and cash equivalents within current assets
241
208
278
230
Non-current liabilities excluding trade and other
payables and provisions
465
93
1,795
1,656
Current liabilities excluding trade and other
payables and provisions
241
149
638
906
The reconciliation of summarised
financia
l information presented to the carrying
amount of our intere
st in the associate is s
et
out
below.
Equity shareholders' funds
1,066
1,045
3,774
3,083
Interest in associates
425
418
794
867
Goodwill
3
3
261
342
Transferred to assets held for sale
–
–
(959)
(1,
257)
Investment proportion not recognised
–
–
(96)
48
Carrying value
428
421
–
–
Profit from continuing operations
542
542
619
632
808
44
Share of profit
217
217
247
178
306
19
Share of profit not recognised
–
–
–
(178)
(32)
–
Share of profit
217
217
247
–
274
19
During
the year e
nded 31 March
2022, the
Gr
oup received
a dividend
from Indus Towe
rs Limited of €
nil (2021:
€
201 million,
2020:
€nil)
and a
divid
end from Safari
com PLC of €170 mill
ion (202
1: €171 millio
n, 2020: €261 mil
lion)
.
Strategic report
Governance
Financials
Other information
170
Vodafone Group Plc
Annual Report 2022
13. Other
investments
The Grou
p holds a number
of other li
sted and u
nlisted investme
nts, mainly c
omprising ma
naged funds,
deposits and governmen
t bonds.
Accounting policies
Other in
vestments
comprisi
ng debt an
d equity inst
ruments
are recogn
ised an
d dereco
gnised on a
trade date
where a pu
rchase or
sa
le o
f a
n
investmen
t is under a
contract
whose term
s require del
ivery
of
the inve
stment within the ti
meframe established
by the market co
ncerned, and
are initiall
y measured at fair value
, including tran
saction cost
s.
Debt securities that are held for collection of contr
actual cash flows where those cash flows represent solely payments of prin
ci
pal and intere
st
are measured at amo
rtised cost usi
ng the
eff
ective inter
est method
, le
ss any impa
irment. Debt
securities t
hat do not meet
the c
riteria for
amortise
d cost ar
e measured
at fair val
ue through pr
ofit an
d loss.
Equity se
curities ar
e clas
sified and
measured at f
air valu
e through oth
er comprehe
nsive in
come, ther
e is no sub
sequent re
classi
f
ication of fa
ir
value gains and losses to profit or loss following derecognition of the investment.
2022
2021
€m
€m
Included withi
n non-current
assets
Equity securities
1
143
128
Debt securities
2
930
797
1,073
925
Included withi
n current assets
Short-term investments:
Bonds and debt securities
3
1,446
1,053
Managed investment funds
1
3,349
2,954
4,795
4,007
Collateral assets
4
698
3,107
Other investments
5
2,438
2,045
7,931
9,159
Notes:
1
Items meas
ured at a fair val
ue, €91 million (2021: €ni
l) of equity securit
ies have a valuation
basis of level 1 cla
ssificatio
n, w
hich comprises f
inancial in
struments whe
re fair value
is determined b
y
unadjusted q
uoted prices
in active marke
ts for identic
al assets an
d
liabilities. T
he remaining items
are measured at fair
value
and the
basis is
level 2 cla
ssificatio
n, wh
ich comprises i
tems where fair
value is de
termined from inp
uts other tha
n quoted prices that a
r
e observable
for the asse
t or liability,
either direct
ly or ind
irect
ly.
2
Items are mea
sured at amortised
cost and have a
fair value of €830 m
illion (2021:
€788 million) wi
th a valuation ba
sis of lev
el 1 classification.
3
Items ar
e measured at fai
r value and t
he valuation ba
sis is level 1 c
lassification.
4
Items are
measured at amor
tised cost and t
he carrying amount
approximates fair
value.
5
Includ
es investments mea
sured at a fair
value of €1,460 mil
lio
n (2021: €1,057 mil
lion). The valuation basis
is level 1. The r
emaining items are measured at
amortised cost and t
he carrying amoun
t
approximates fa
ir value.
Non-current debt secur
ities within non-curren
t assets include €885 m
illion (2021: €764 million) of loan no
tes issued by Vodafon
eZi
ggo Hold
ing
B.V.
The Group invests surplus cash positions across a portfolio of shor
t-ter
m investments to man
age liqui
dity and cred
it risk wh
ils
t achievin
g
suitable returns. C
ollateral arrangements on de
rivative financial instruments
result in cash b
eing paid/(held),
r
epa
yable when
the der
ivatives are
settled. Th
ese assets do not m
eet the defini
tion
of
cash and cash equiv
alents but are
inclu
ded in th
e Group’s n
et debt
based on
their liqu
idity.
Bonds an
d debt
securiti
es includes
€681 mil
lion (2
021: €nil
) of hi
ghly li
quid Japan
ese; €nil
(2021: €
499 mil
lion) Germ
an; €501
million (202
1:
€nil) Bel
gian; €200 mil
lion (2
021: €554 mill
ion) French go
vernmen
t securitie
s and €64 million (
2021: €nil
) of UK governme
nt bon
ds.
Managed investment funds of €3,34
9 million (2021: €2,954 million) are in funds with liquidity of up to 90 days.
Collateral asse
ts of €698 million (2021: €3,107 milli
on) represents collateral paid on derivative
f
inancia
l instruments.
Other inve
stments are ex
cluded fro
m net debt base
d on their liqu
idity
and primarily
cons
ist of restricted d
ebt securities inclu
ding amounts held
in qualif
ying asse
ts by Group in
surance co
mp
anies to meet regul
atory requirement
s.
Strategic report
Governance
Financials
Other information
171
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
14.
Trade an
d other
rece
ivable
s
Trade
and other
receiv
ables
mainly co
nsist o
f amount
s owed to u
s by cust
omers
and amount
s that w
e pay
to our suppli
ers in adva
nce. Deriv
ative finan
cial instru
ments with a positi
ve market va
lue are rep
orted withi
n
this no
te as are contract a
ssets, which re
present an asset f
or accrued revenue
in respect of
goods or
service
s delivered to custome
rs for which a
tr
ad
e receivable does no
t yet exist, and finance
lease
receiv
ables r
ecognis
ed wher
e the Group
acts as
a less
or. See note 20 ‘Leases’ for more information on the
Group’s lea
sing activities.
Accounting policies
Trade re
ceivables
represent amo
unts o
wed by custo
mers where
the
right to receive payment is conditional only on the passage of
time. Trad
e
receiv
ables th
at are reco
vered in in
stalments f
rom cu
stomers over
an extended period are di
scounted at mar
ket rates and interes
t revenue is
accreted over the ex
pected re
payment period
. Other trade
receivab
les do not carry any inter
est and are stated at th
eir nominal
value. When t
he
Group establishes a practice of selling p
ortfolios of receivables from time to time these portfolios are recorded at fair value
through other
compreh
ensive in
come; all o
ther trade r
eceiv
ables are re
corded
at amortise
d cost.
The carrying value of all trade re
ceivables, contract
assets and finance lease receivables recorded at amortised cost is reduce
d b
y
allowa
nces
for lifetime estimated credit losses. Est
imated future credit los
ses are f
irst recorde
d on the initial
recognit
ion of a rec
eiva
ble and are based on
the ageing of the receivable balances, historical experience and forward look
ing considerations. Individual balances are writte
n off when
management deems them not to be collecti
ble.
2022
2021
€m
€m
Included withi
n non-current
assets
Trade receivables
34
52
Trade receivables held
at fair value through
other comprehensiv
e income
606
278
Net investment in leases
134
104
Contract assets
495
528
Contract-related costs
630
580
Other receivables
37
76
Prepayments
231
247
Derivative financial instruments
1
4,216
2,912
6,383
4,777
Included withi
n current assets
Trade receivables
3,300
3,625
Trade receivables held
at fair value through
other comprehensiv
e income
802
466
Net investment in leases
66
36
Contract assets
3,056
3,038
Contract-related costs
1,403
1,364
Amounts owed by assoc
iates and joint ventures
241
184
Other receivables
869
889
Prepayments
872
1,082
Derivative financial instruments
1
410
239
11,019
10,923
Note:
1
Items are mea
sured at fai
r value and the va
luation basis
is level 2 class
ification, which
comprises it
ems where fair val
ue is
determined
from inputs o
ther than quoted prices t
hat are observable f
or
the asset or
liability, eithe
r
directl
y or indirectly
.
The Grou
p’s trade re
ceivables
and co
ntract asset
s are clas
sified at
amortise
d cost unle
ss stated o
therwise
and are me
asured af
t
er allowan
ces
for future expected
credit losses, se
e note
22 ‘Capital an
d financial risk
management’ for more infor
mation on credit r
isk.
The carry
ing amounts o
f trade a
nd other rec
eivables
, which ar
e measured a
t amorti
sed cost,
approxi
mate their f
air valu
e and are
predomin
antly
non-interest bearin
g.
The Group’s co
ntract-
related cost
s compris
e
€
1,967 million
(
2021:
€1,
883 million) rel
ating to cost
s incurred to ob
tain custome
r
con
tracts
and
€66 mil
lion (2021
: €61 mill
ion) rela
ting to cos
ts incurred to
fulfil
customer co
ntracts
; an amort
isation an
d impai
rment expen
se
of €1,51
7 million
(202
1: €1,497 mi
llion) was rec
ognised in ope
rating profit
during the year
.
The fair values of the deriv
ative financial instruments are
calculated by discounting the futur
e cash flows to net present valu
es u
sing ap
propriate
market intere
st rates and forei
gn currency rates prevailing
at 31 March.
Strategic report
Governance
Financials
Other information
172
Vodafone Group Plc
Annual Report 2022
15. Trade and othe
r payables
Trade a
nd othe
r payabl
es mainly
consist of
amounts
ow
ed to supp
liers that have bee
n invoiced or a
r
e
accru
ed and c
ontract
liabi
liti
es relati
ng to cons
ider
ation r
eceived
from cus
tome
rs in adv
ance. The
y also
include taxes and soc
ial security amounts due in relati
on to the Gr
oup’s r
ole as an
employer
. Derivat
ive
financ
ial instruments with
a negative ma
r
ke
t value are reporte
d within this note.
Accounting policies
Trade paya
bles are not interest-
bearing and are st
ated at their nominal val
ue.
2022
2021
€m
€m
Included within non-
current l
iabilities
Other payables
452
424
Accruals
28
47
Contract liabilities
530
519
Derivative financial instruments
1
1,506
3,919
2,516
4,909
Included within cu
rrent liabilitie
s
Trade payables
7,327
6,739
Amounts owed to associates and joint ventures
40
36
Other taxes and soci
al security payable
1,114
1,196
Other payables
2,032
2,349
Accruals
2
6,991
5,688
Contract liabilities
1,991
1,971
Derivative financial instruments
1
166
91
19,661
18,070
Notes:
1
Items are
measured at fai
r value and t
he valuation basis
is level 2 c
lassification, w
hich comprises i
tems where fair
value is
de
termined from inputs
other than quo
ted prices that a
re observable for
the asset or
liability, eithe
r
directly
or indirectly.
2
Includes
€1,434 million (2021: €339
million) payable in rela
tion to the irrevoc
able and non-discret
ionary share buyback progr
ammes.
The carrying amounts of trade and other payab
les approximate their fair value.
Materiall
y all of the €1,971 mill
ion recorded as curr
ent contrac
t
liabilities at
1 April 2021 was re
cognised as rev
enue during
the year.
Other pay
ables include
d within non
-current liab
ilities incl
ude €3
51 million (2021: €383 million) in respect of the re-insurance
of
a third
party
annuity policy related to the Vodafone and CWW Sections of the Voda
fone UK Group P
en
sion Scheme.
The fair values of the der
ivative financial instruments
are calculated by discount
ing the future cash flows to
net present valu
es usin
g appropr
iate
market intere
st rates and forei
gn currency rates prevailin
g at 31 March.
Strategic report
Governance
Financials
Other information
173
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
16. Provisions
A provisio
n is a liabil
ity recorded in the sta
tement of fin
ancial position
, where there
is uncertainty
over the
timing or am
ount that wi
ll be p
aid, and is ther
efore of
ten estimated. T
he mai
n provisions w
e hold are i
n
relation t
o asset retirem
ent obligations, whi
ch includ
e th
e cost of returning
network i
nfrastructure sites to
their o
riginal conditio
n at the end of the lea
se
an
d claims for l
egal and regul
atory matt
ers.
Accounting policies
Provisions are recognised when the Group has a present obliga
tion
(legal
or constructive) as a re
sult of a past event, it is pr
o
bable tha
t the Group will be required
to settle that obligation an
d a reliable estimate
can be made
of the amount of the obligation.
Pr
ovisions are measured at the D
ire
ctors’ best estimate of the
expenditure requ
ired to settle the obli
gation at the repo
rting
date and are
discounted to present value
where the effect is material. Where the ti
ming of
settlement is uncertain
amounts are cla
ssifie
d as non-current wh
ere settlement is expe
cted
more than 12 months from the reporti
ng date.
Asset retirement ob
ligations
In the co
urse of th
e Group’s activities,
a number
of sites and ot
her assets are
utilised which are e
xpected to have costs assoc
iat
ed
with d
ecommissioning. Th
e
associated cash o
utflows are substanti
ally expected to
occur at
the dates o
f decommissio
ning of the assets
to which they re
late
, and are
long term in
nature.
Legal and r
egulatory
The Group is involved in a number of legal and other d
isputes, including where the Group has received no
tifications of possible
claims. T
he
Directo
rs of the Com
pany, aft
er tak
ing legal
advice
, have establ
ished pr
ovisions
consider
ing the fa
cts of each
case. For
a disc
us
sion of certain
legal issues potentially affecting the Group see note 29 ‘Cont
ing
ent li
abilities and legal proceedings’ to the consolidated fin
anci
al statements
.
Restructuring
The Group undertakes periodic reviews of
its operations and recognises
provisions as required
based
on the outcomes of these re
views.
The associated cash outflows for
restructuring
costs are primarily le
ss than one year.
Other
Other compris
e various items that d
o not fall within the Group’s oth
er categories of provisions.
Asset
retirement
L
egal and
obligations
regulatory
Restructuring
Other
Total
€m
€m
€m
€m
€m
1 April 2020
955
502
545
530
2,532
Exchange movements
6
(11)
4
7
6
Acquisition of subsidiaries
6
–
–
–
6
Amounts capitalised in the year
294
–
–
–
294
Amounts charged to the income statement
–
138
153
167
458
Utilised in the year - payments
(32)
(54)
(243)
(175)
(504)
Amounts released to the income statement
(7)
(47)
(33)
(66)
(153)
31 March 2021
1,222
528
426
463
2,639
Exchange movements
3
(25)
(4)
5
(21)
Amounts capitalised in the year
297
–
–
–
297
Amounts charged to the income statement
–
216
216
139
571
Utilised in the year - payments
(51)
(128)
(295)
(197)
(671)
Amounts released to the income statement
(1)
(142)
(41)
(83)
(267)
31 March 2022
1,470
449
302
327
2,548
Strategic report
Governance
Financials
Other information
174
Vodafone Group Plc
Annual Report 2022
Provisions have been analysed between current a
n
d
non-current as follows:
31 March 2022
Ass
et
retirement
Legal
and
obli
gations
regulatory
Restructuri
ng
Other
Total
€m
€m
€m
€m
€m
Current liabilities
43
235
241
148
667
Non-current liabilities
1,427
214
61
179
1,881
1,470
449
302
327
2,548
31 March 2021
A
sset
retirement
L
egal and
obligations
regulatory
Restr
ucturin
g
Other
Total
€m
€m
€m
€m
€m
Current liabilities
43
273
353
223
892
Non-current liabilities
1,179
255
73
240
1,747
1,222
528
426
463
2,639
17. Cal
led up share ca
pital
Called
up shar
e capita
l is the
number o
f shares
in iss
ue at thei
r par v
alue. A nu
mber of s
hares w
ere all
otted
during the year in
relation to e
mployee share schemes.
Accounting policies
Equity in
struments iss
ued by the Gr
oup are recorde
d at the amou
nt o
f the procee
ds receive
d, net of dire
ct issuan
ce costs.
2022
2021
Nu
mber €m
Number €m
Ordinary shares of 20
20
Ū
21
US cents
each allotted,
issued and fu
lly paid:
1, 2, 3
1 April
28,816,835,7
78
4,797
28,815,914,9
78
4,797
Allotted during the year
792,090
–
920,800
–
31 March
28,81
7,627,868
4,797
28,816,835,778
4,797
Notes:
1
At 31
March 2022 there were 50,000 (2021: 50
,000) 7% cumulative
fixed rate s
hares of £1 each in iss
ue.
2
At 31
March 2022 the Group
held 447,576,522
(2021: 592,642,309)
treasury shares with a
nominal value of €75
million (2021: €9
9 mil
lion). The ma
rket value of shares held w
as €661 million
(2021: €918 million). D
uring the year, 68,306,442 (2021: 63,830,400
) tr
easury shares were
reissued under Gro
up share schemes.
3
On 5
March 2019 the Group anno
unced the placing of
subordinated manda
tory convertible bond
s totalling £1.72 billio
n with a 2
year
maturity date in 2021
and £1.72 billion wit
h a 3 year
maturity date in
2022. During the year, 1
,518,629,693 treasury share
s were issued in se
ttlement of tranche 2
of the maturing
su
bordinated man
datory con
vertible bond, whilst in th
e year ended
31 March 2021, 1,426,793,872 o
rdinary shares were
iss
ued in settlement
of tranche 1. For
further d
etails see note 21 ‘Borrow
ing
s’.
Strategic report
Governance
Financials
Other information
175
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
18. Reco
ncilia
tion of ne
t cash flo
w from op
eratin
g activiti
es
The ta
ble bel
ow shows ho
w our profi
t/(l
oss) for t
he year fr
om co
ntinuing
opera
tions t
ranslat
es into
cash
flows gen
erated from our oper
ating activi
ties.
2022
2021 2020
Notes
€m
€m €m
Profit/(loss) for
the financial year
2,624
536
(455)
Non-operating expense
–
–
3
Investment income
5
(254)
(330)
(248)
Financing costs
5
1,964
1,027
3,549
Income tax expense
6
1,330
3,864
1,250
Operating profit
5,664
5,097
4,099
Adjustments for:
Share-based payments
and other non-cash charges
173
146
146
Depreciation
and amortisation
10, 1
1
13,845
14,101
14,174
Loss on disposal of property,
pla
nt and equipment a
nd intangible assets
30
17
51
Share of result of equity
ac
counted associates and joint ventures
12
(211)
(342)
2,505
Impairment losses
4
–
–
1,685
Other income
3
(79)
(568)
(4,
281)
(Increase)/de
crease in inventory
(162)
(68)
68
(Increase)/de
crease in trade and other receivables
14
(638)
582
(38)
Increase/(decrease) in
trade and other payables
15
384
(730)
(100)
Cash gene
rated by operations
19,006
18,235
18,309
Net tax paid
(925)
(1,020)
(930)
Net cash flow from
operating activities
18,081
17,215
17,379
19. C
ash an
d cash e
quival
ents
The major
ity of t
he Group’
s cash is held i
n bank de
posits or mon
ey market
funds w
hich have a m
aturity of
three mont
hs or less fro
m acquisition to en
able us to meet
our short-term li
quidit
y requirements
.
Accounting policies
Cash and
cash equi
valents co
mpris
e cash in han
d and cal
l depo
s
its, and other sho
rt-term highl
y liquid in
vestments th
at are read
ily convert
ible
to a kno
wn amount of
cash an
d are subjec
t to an insign
ifican
t risk of
changes in
value. A
ssets in mo
ney ma
rket funds
, whose con
tractual cash
flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from
change
s in fair
value incl
uded in ne
t profit or
loss for
the period. A
ll other
cash and
cash equival
ents are m
easured at
amortise
d cost.
2022
2021
€m
€m
Cash at bank and in hand
2,220
2,705
Money market funds
1
5,276
3,116
Cash and c
ash equivalen
ts as presen
ted
in th
e statement of finan
cial position
7,496
5,821
Bank overdrafts
(125)
(31)
Cash and c
ash equivalen
ts as presen
ted in the
statement
of cash flows
7,371
5,790
Note:
1
Items ar
e measured at fai
r value and t
he valuation ba
sis is level 1
classificatio
n, which comprise
s financ
ial instrumen
ts whe
re fair va
lue is determ
ined by unadjus
ted quoted prices
in active mar
kets.
The carrying amount of balances at amortis
ed cost approximates their fair value.
Cas
h and cash equ
ivalents of €1,5
54 million (202
1: €1,741
million
) are held in
countries with rest
rictions o
n remittances but w
here the
balances
could be us
ed to repay
subsidiar
ies’ third p
arty liabilities
. In addit
ion, those balan
ces could also
be used
to repay
€932 mill
ion (
2021: €879
million) of
intercompany
liabilit
ies as at 31 M
arch 2022
.
Strategic report
Governance
Financials
Other information
176
Vodafone Group Plc
Annual Report 2022
20. Leases
The G
roup lea
ses as
sets f
rom o
ther pa
rties
(the
Group
is a
lessee
) and
also lea
ses a
ssets
to oth
er par
ties
(the
Group is a le
ss
or).
This note describes how the
Group accounts for leases and provides
details about its lease
arrangements.
Accounting policies
As a
lessee
When the Gr
oup leas
es an asset
, a ‘right-
of-use
asset’ is re
cognised f
or the le
ased item
and a lease l
iability
is reco
gnised fo
r any lease paym
ents
to be pa
id over the leas
e term at th
e lease com
mencement da
te. The right-o
f-use as
set is initi
ally measur
ed at cost
, being th
e
present value of
the lease p
ayments pa
id or pay
able, plu
s any init
ial direct
costs in
curred in en
tering the l
ease an
d less any
lease incen
tives
recei
ved.
Right-of
-use assets are
depreci
ated on a straight-l
ine basis f
rom
the co
mmencement date to th
e earlier of
the end of the asset’
s us
eful life or
the end of the lease term. The lease term i
s the non-cancellable period of the lease plus any periods for which the Grou
p is ‘reasonably certain’
to exercise any exten
sion options (see belo
w).
The useful life of
the asset is
determined in
a manner cons
istent to that for o
w
ned
prope
rty, pl
ant
and equi
pment (a
s descri
bed in not
e 11 ‘Pro
perty, pl
ant and e
quipmen
t’). If r
ight-of
-use asset
s are cons
idered t
o be imp
aired,
the carry
ing value
is reduced acco
rdingly.
Lease lia
bilities are in
itially mea
sured at the value of
the lease
payment
s over the lease term th
at are not p
aid
at the commen
cement date
and
are usually discounted us
ing the incremental borrowin
g rates of th
e applic
able Group entity (the rate
implicit in the lea
se is
used if it is readily
determin
able). Lease payments included in
the lease l
iability in
clude bo
th fixed pay
men
ts and in-substa
nce fixed payments durin
g the term of
the lease.
After initi
al recognitio
n, the lease li
ability is r
ecorded at
amor
tised co
st usin
g the effective
interest method
. It is remeasu
red when ther
e is a
change in future l
ease payments ari
sing from
a chang
e in an index or r
ate (e.g. an inflat
ion related increa
se) or if the Group’
s asse
ssment of the
lease term
change
s; any ch
anges in the l
ease liab
ility as a r
esult of th
ese change
s also re
sults in a
corres
ponding ch
ange in t
he recorded right-
of-use asset.
As a lessor
Where the Grou
p is a lesso
r, it deter
mines at inc
eption whether th
e lease
is a fin
ance or an o
perating le
ase. When a le
ase transf
ers subst
antially
all the ri
sks and re
wards of o
wnership of the
underlyin
g asset then the l
ease is
a finance lea
se; otherw
ise the leas
e is an o
pe
rating lease.
Where the Grou
p is an intermed
iate lessor
,
the
in
terests
in
the head leas
e and the su
b-lease are ac
counted for
separate
ly and t
he lease
classif
ication of a sub-le
ase is determined by refer
ence to
the right-of
-use asset ar
ising fro
m the head leas
e.
Income from operating leases is recognised on a strai
ght-line basis over the lease term. Income from finance leases is re
cog
n
is
ed
at lease
commencem
ent with interest
income recogni
sed over the le
ase term.
Lease in
come is reco
gnised
as reve
nue for tran
saction
s that are
part of the Gr
oup’s or
dinary acti
vities (p
rimarily le
ases of h
a
ndsets or other
equipment to customers, leases of wholesale access to the Group’s fibre and cable networks and leases of tower infrastructure a
sset
s). The
Group uses IFR
S 15 principles to
all
ocate the consi
deration in con
tracts between an
y lease and non-l
ease compon
ents.
The Group’s leasing activities as a lessee
The Group leases b
uildings for its retail stores,
offices and data centres, land
on which
to con
struct mobile
base stat
ions, space on mo
bile bas
e
stati
ons to place
active RAN eq
uipment and n
etwork spac
e (primarily r
ack spac
e or duct spac
e). In addi
tion, the
Gr
oup leases fi
bre and other
fixed connectivity to provide internal connectivity for the Grou
p’s operations and on a wholesale basis from other operators to
provide f
ixed
connectivity s
ervices to th
e Group’s custo
mers.
The Group’s gener
al approach to determining lease te
rm by class of
asset is descr
ibed in note 1 under crit
ical account
ing judge
ments and key
sources of estim
ation uncertainty.
Most of the Group’s lea
ses include future p
r
ice increases through fixed percent
age increases, indexation to
inflat
ion
me
asures
on a pe
riodic
basis or
rent review cl
auses. Other t
han fixed pe
rcentage incre
ases the
lease liabil
ity does not refl
ect the imp
act of these fu
ture in
creases unl
ess
the measure
ment date h
as passed
. The Group’
s leases con
tain no m
aterial var
iable pay
ments clau
ses othe
r than those rel
ated to t
he numb
er of
operators s
haring sp
ace on third
party mobile b
ase station
s.
The Group sub-leases excess retail and office properties under
bo
th operating
and
f
inance leases; see disclosure on the
Group’s
leasing
activit
ies
as a lessor below on pag
e 179.
Strategic report
Governance
Financials
Other information
177
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
20. Leas
es (con
tinued)
Optional leas
e periods
Where practicable the Group seeks
to incl
ude extension o
r break o
ptions in lease
s to provide o
perational f
lexibility
, therefore
many of th
e
Group’
s lease con
tract
s contain o
ptional
periods
. The Grou
p’s pol
icy on ass
essin
g and reass
essin
g whether
it is rea
sonably c
ert
ain tha
t the
optional pe
riod will
be inclu
ded in th
e lease term is
describe
d in note 1 ‘
Basis of pre
paration
’ under ‘cri
tical ac
counting jud
gements an
d key
sources of estim
ation uncertainty’.
After initial recognition of a lease, th
e Group
only re
assesses the lease term when there is a significant eve
nt or a significa
nt chan
ge in
circum
stances, which wa
s not anticipat
ed at the time of the
pr
evious assess
ment. Signific
ant events or sign
ificant chan
ges in c
ircu
mstan
ces
could in
clude merger
and acqu
isition or
similar ac
tivity, s
ignifican
t expendit
ure on the leas
ed asset no
t anticip
ated in th
e pr
evious as
sessment,
or detailed management plans indicating a different conclusion on
optional perio
ds to
th
e previous assess
ment. Where a signific
an
t event or
signifi
cant chan
ge in cir
cumstanc
es does not o
ccur, the l
ease term
and therefo
re lease l
iability an
d right-of
-use asse
t value,
will decline over
time.
The Group’s cash outflow for leases in the year ended 31 March 2022
was €4,338 million (2021: €4,234
mi
llion) and,
absent signif
icant future
change
s in the vol
ume of the Gro
up’s act
ivities or
strate
gic chan
ges to use more o
r fewer o
wned asset
s this level
of cash outfl
ow from leases
would be expected to continue for f
uture periods, subject
to co
ntractual price incre
ases. The future cash ou
tflows included wit
hin l
ease lia
bilities
are shown in
the matur
ity analysi
s below. The
maturity
analysis on
ly include
s the reason
ably cert
ain paym
ents to be made
; cash
outflows in
these future periods will likely exceed these amounts as payments will b
e made on optional periods not considered reasonably ce
rt
ain a
t
present and on new leases
entered into in fut
ure periods.
The Group’s le
ases for cu
stomer connect
ivity are normall
y either
un
der regulate
d access or n
etwork shar
ing or s
imilar preferen
t
ial ac
cess
arrangements and as a result the Group normally has significant flexibility over the term it can lease such connections for; ge
nerally the notice
period re
quired to can
cel the le
ase is less th
an the notic
e period
included in th
e service
contract
with the end cu
stomer. As
a re
sult, the Group
does not h
ave any sig
nificant c
ash exposure
to optional
periods on
custo
mer connect
ivity as the Gr
oup ca
n cancel the l
ease when
the
service
agreemen
t ends. In
some circum
stances
the Group
is committe
d to minimu
m spend amoun
ts fo
r conn
ectivity leases
, which are included wit
hin
reported le
ase liabil
ities.
Sale and leaseback
Sale and leaseback transactions entered into by t
he Group were not material, individually or in aggregate.
Amounts recognised in the primary financial statements in relation to lessee transactions
Right-
of-use a
ssets
The carry
ing value of
the Grou
p’s right-o
f-use asse
ts, depr
eciati
on charge f
or the ye
ar and ad
ditions dur
ing the year
are dis
cl
osed in note 11
‘Proper
ty, plan
t and equi
pment’.
Lease liabilities
The Group’s le
ase liabil
ities are dis
closed in no
te 21 ‘Borrowi
n
gs’. The maturity
profile of the Gro
up’s lea
se liabilit
ies is a
s follows:
2022 2021
€m
€m
Within one year
3,130
3,419
In more than one year but less than two
years
2,189
2,142
In more than two years but less th
an three years
1,759
1,661
In more than three years but less t
han four years
1,579
1,457
In more than four years but less than five years
1,387
1,316
In more than five years
4,242
4,696
14,286
14,691
Effect of discounting
(1,747)
(1,659)
Lease liability - as disclose
d in note 21 ‘Borrowings’
12,539
13,032
At 31 March 2022 the Grou
p has entered into le
ase contracts with
payment obligations with an undiscounted value of €51 million
(202
1: €82
million) t
hat had no
t commen
ced at 31 M
arch 20
22.
Interest expense on le
ase liabil
ities for the year
is disclos
ed in n
ote 5 ‘I
nvestment
income an
d finan
cing cos
ts’.
The Grou
p has no mater
ial lia
bilities
under resi
dual valu
e guarantee
s and makes
no materi
al varia
ble payments n
ot inclu
ded in t
he le
ase liability.
The Group does not apply eithe
r the short term or
low value expedient options in IFR
S 16
.
Strategic report
Governance
Financials
Other information
178
Vodafone Group Plc
Annual Report 2022
The Group’s leasing activities as a lessor
The Group ha
s a wide r
ange of lesso
r activit
ies with consu
mer an
d ent
erprise
customers, oth
er telecomm
unication com
panies an
d o
ther
compani
es. With con
sumer and ent
erprise cu
sto
mers, the Grou
p generates l
ease income
from the provisio
n
of handsets
, routers and
other
communications equipment. The Group provides wholesale access to the Group’s fibre and cable networks and leases out space on t
he Group’s
owned mobil
e base st
ations to oth
er telecommun
ication com
panies.
In ad
dition,
the Group sub-leases retail stores to franchise p
artners in
certain markets and leases out surplus assets (e
.g. vaca
nt offices an
d retail stores) to other companies.
Lessor tr
ansactions
are classif
ied as opera
ting or fin
ance leas
es b
ased on whether
the lease tran
sfers subs
tantially all of the
risks and rewards
incident
al to o
wnership of
the asse
t. Leas
es are indi
vidually
assessed
, but gene
rally, the Gr
oup’
s lessor tr
ansactio
ns are cl
as
sifi
ed as:
-
O
perating leases
where the Group is lessor of space on owned mobile base stations
, prov
ides
wholesale access to its fibre and c
able
networks or provides routers or similar equipment to fixed customers; and
-
Fi
nance le
ases where the Group is sub-lessor of handsets
or
similar items in back-to
-
back
arrangemen
ts or wher
e
surplus ass
ets are sublet
out for all o
r substant
ially all o
f the remainin
g head lease
term.
The Group’s income as a lessor in the year is as follow
s:
2022 2021
€m €m
Operatin
g
leases
Lease revenue (note 2 ‘Revenue disa
gg
re
g
ation and se
g
mental anal
y
sis’)
758
559
Income from leases not reco
g
nised as revenue
45
180
The Group’s ne
t investment
s in leases ar
e disclo
sed in note 14
‘Tra
de and
other receiv
ables’. The committed amounts to b
e recei
ved from th
e
Group’s operating
leas
es are a
s follows:
Maturity
Within one
year
In one to two
years
In two to
thr
ee years
In three to four
years
In four to five
years
In more than
five year
s
Total
€m
€m
€m €m
€m €m
€m
31 March 2022
Committed operating lease
payments due to the Group
as a lessor
513
250
161
128
114
343
1,509
31 March 2021
Committed operating lease
payments due to the Group
as a lessor
510
261
175
134
115
395
1,590
The Group ha
s no material le
ase income ar
ising from v
ariable lea
se payments.
Strategic report
Governance
Financials
Other information
179
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
21. Bo
rrowin
gs
The Grou
p’s sources of bor
rowing for
fundi
ng and liquid
ity purpos
es come from a r
ange of com
mitted bank
facilitie
s and through short-term and
long-term issuances in
the capital markets inc
luding bond and
comm
ercial pap
er issues and bank
loans. Liabil
ities arising fro
m the Group’s lea
se arrangemen
ts are also
reported in
borrowings; see note
20 ‘Leases’. We man
age the basis on
which we inc
ur interest on deb
t
between
fixed in
terest rates and floating interest rates
depending o
n market co
nditio
ns using int
erest r
ate
derivatives.
The Group enters into
foreign exchan
ge contracts to
mitigate the impac
t of exchange ra
te
moveme
nts on cer
tain m
onetar
y items.
Accounting policies
Interes
t-bearin
g loans
and overdr
afts are in
itially mea
sured at f
air value
(which i
s equal to co
st at ince
ption)
, and are su
bse
quen
tly measured at
amortise
d cost, usi
ng the effecti
ve interest rat
e method. Where t
hey are iden
tified as a hed
ged item in a d
esignated f
air value
hedge
relation
ship, fa
ir value ad
justments
are recogn
ised in
accordan
ce with o
ur policy (see no
te 22 ‘Ca
pital an
d financi
al risk man
a
gement’
). Any
difference between the procee
ds net of transaction costs and the amount due on settlement or r
edemption of borrowings is recogn
ised o
ver
the term of the borro
wing. Where bo
nds issued
with cer
tain conv
ersion
rights are i
dentifie
d as compoun
d instrument
s they are ini
tially
measured at f
air value with th
e nominal amoun
ts
re
cognised as a component in equity and the fair
value of future coupons incl
ud
ed i
n
borrowings. These are subsequentl
y measured at amort
ised co
st using the effect
ive interes
t rate method.
Borrowings
2022
2021
€m
€m
Non-current borrowings
Bonds
46,156
44,634
Bank loans
629
761
Lease liabilities (note 20)
9,810
9,909
Bank borrowings secured ag
ainst Indian assets
–
385
Other borrowings
1
1,536
3,583
58,131
59,272
Current borrowings
Bonds
1,875
2,251
Bank loans
688
658
Lease liabilities (note 20)
2,729
3,123
Collateral liabilities
2,914
962
Bank borrowings secured ag
ainst Indian assets
1,382
862
Other borrowings
1
2,373
632
11,961
8,488
Borrowings
70,092
67,760
Note:
1
Includes
€1,273 million (2021: €3,312
million) an
d €2,165 millio
n (2021:
€381 million) of licence a
nd spectrum fees payable i
n no
n-current and
current borrow
ings respectively.
The fair value of the Group’s financial liabilities held at amorti
sed cost
approxima
te to fair val
ue with the excep
tion of long
-ter
m bo
nds
wit
h a
carr
y
in
g value of €46,1
56 million (2021:
€44,634 mi
llion) which have a
fair value of €46,
348 million (20
21: €48,630 mi
llion). F
air valu
e is
based
on level 1 of the fair value hierarchy using quoted market prices.
The Grou
p’s borro
wings al
so inclu
de €1,38
2 million (
2021:
€1,247
milli
on) of bank b
or
rowings that are secured against the Group
’s
shareholdings in Ind
us Towers and Vodafone Idea (
see note 12 ‘In
vest
ments in Associate
s and Joint Vent
ures’ for further de
tails
of these assets)
and will be repaid through the reali
sation of proceeds from th
ose asset
s. In accor
dance wi
th the terms of th
e loan arr
angement,
the Grou
p
intends to dis
pose of its
shareholding in In
dus Towers in order to repa
y the borrowing.
The Grou
p’s borro
wings incl
ude cer
tain bond
s which ha
ve been desi
gnated in he
dge rela
tionships
, which a
re carried a
t €1,316
mil
lion higher
(2021: €1,390 mill
ion) than their eu
ro equivalent redem
ption
value. In addition, where bonds are issued in currencies other than euros, the
Group has entered into foreign currency swaps to fix the euro cash outf
lows on redempti
on
. The impact of these swaps is not ref
lected in
borrowings a
nd would decrease the euro equivalent redemption value of the bonds by €1,456 million (2021:
€127 million).
Commercial paper
programmes
We currently have US and
euro co
mme
rcial paper programmes of US$15 bi
llion (€13.5 billion) and €10 billi
on respectively which a
re avai
lable
to be used to meet
short-term liquidity re
quirements
. At 31 March
2022 both programmes rem
ained undr
awn.
The commercial paper facilities were supported by US$4.0
billion (€3.6 billion) and €4.0 billion of syndicated committed bank f
acilities.
No
amounts had been dr
awn under these fa
cilities.
Strategic report
Governance
Financials
Other information
180
Vodafone Group Plc
Annual Report 2022
Bonds
We have a €
30 bill
ion euro med
ium-term note pro
gramme and
a US shel
f programme wh
ich are use
d to meet me
dium to long
-term fundi
ng
requir
ements. A
t 31 March
2022 th
e total
amounts in
issue un
der the
se pro
grammes spl
it by curr
ency we
re US$2
5.3 bill
ion, €1
6.2
billion, £3
billion,
AUD$1.2 billion, HKD$2.
1 billion,
NOK2.2 billion,
CHF0.7 billion and
JPY10 billion.
Vantage Tower
s A.G. has
a €5 billio
n debt issuance
programme to
me
et its medium to lo
ng-term fundin
g requirement
s. As at 31 Mar
ch 2022,
Vantage Towers A.G. had bonds
out
standing with a
nominal value of €2.2 b
illion.
At 31 M
arch 20
22 the Grou
p had bo
nds outs
tanding w
ith a no
minal
value equ
ivalent to
€46.7
billion
. Duri
ng the ye
ar ended 31 M
ar
ch 2022,
bonds wi
th a nominal v
alue of US$2.
5 billion were
issued utili
sin
g the US
Shelf
programme and bonds wi
th a nominal value of €2.
1 billion
matured.
Bonds
mat
ure between 20
22 and 2059 (2021
: 2021 and 2059)
an
d have intere
st rates bet
ween 0% and 7.875% (20
21: 0% and 7.87
5%).
Mandatory
convertible bonds
On 12 March 2019 the Group issued £3.4 billion of subordinated mandatory convertible
bonds (‘MC
Bs’) split into two equal tran
ches of £1.7
billion wit
h coupons of 1.
2% and 1.5% respe
ctively
. The
f
irst tranche mature
d on 12 March 2021 at a conv
ersion price of £1.2
055
per share an
d
the secon
d tranche m
atured on
12 March 2
022 at a co
nversion
price of £1
.1326 per
share. The
se were re
cognis
ed as com
pound instr
uments
with nominal values of £3.4 billion (€3.8
bi
ll
ion) recognised as a
compo
nent of sharehold
ers’ funds in
equity and the fair valu
e of future coupons
£0.1 billion (€0.1 billi
on) reco
gn
ised
as
a fi
nancial liability in
borrowings. The Grou
p’s strategy
was to hedge the equity ris
k associat
ed with the
MCB issuan
ce to any future movem
ent in its share pr
ice by an opti
on strate
gy designed to hed
ge the economic im
pact of share pri
ce
movements
. In instance
s where the Group
decides to
buy back ordina
ry shares to mitigate dilution result
ing from the conversion,
the hedging
strategy provide
s a hedge for the repurchase pric
e.
Treasury shares
The G
roup held a maxi
mum of 1,911,6
61,729 (20
21: 2,043,73
2,147) of its
own shares
during the yea
r which repr
esented 6.6
% (2021:
7.1%) of
issued s
hare capital
at that time
.
Strategic report
Governance
Financials
Other information
181
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
22. Capi
tal and fi
nancia
l risk man
ageme
nt
This not
e detai
ls the tr
easu
ry manag
ement an
d financi
al ris
k manag
ement obj
ectiv
es and p
olicies
, as we
ll
as the ex
posure and sensitivity o
f the Group to credit, l
iquidity, interest and f
oreign exchange
risk, and the
polici
es in plac
e to monito
r and manag
e these risks
.
Accounting policies
Financial instruments
Financial a
ssets and f
inancial li
abilities,
in respect o
f financ
ial in
struments,
are recogni
sed on the Grou
p’s consolid
ated sta
tement of financial
positio
n when the Group beco
mes a party to th
e contr
actual pro
visions of the in
strument.
Financial liabilities and equity instruments
Financial l
iabilit
ies and equ
ity instruments
issued by the G
roup
are classif
ied accord
ing to the subs
tance of the contr
actual a
rr
angements
entered into and the definitions of a financ
ial li
ability and
an equity instr
ument. An equity
instrument is a
ny contract th
at p
rovides a residual
interest in the a
ssets of the
Group after deduct
ing all of i
ts
liabilities and inc
lu
des no obligation to deliver cash or other
financial asset
s. The
accounting policies adopted for specific financial liabili
ties and equity in
strume
n
ts
are set out below.
Financial lia
bilities under put option arrang
ements
The Group has an obligation to pay a fixed rate of return to minority eq
uity shareholders in the Group’s subsidiary Kabel Deuts
chland AG, und
er
the terms of
a court-
imposed domi
nation and prof
it and loss transf
er agreement.
This agreement
also provid
es the minority sh
areholders
the
option to p
ut their shareholding to Vodafone a
t a fixed price p
er
share. The obligation to pur
cha
se the shar
es has been recogn
i
sed as a financial
liability and no non-c
ontroll
ing interests are recognised in re
spect of mi
nority sh
areholders.
Interest
costs are ac
crued at th
e
agreed rate of
return and recognised in fin
ancing costs.
Derivative financial instrum
ents and hedge
accounting
The Group’s
activit
ies expose it to
the financi
al risks of ch
ange
s in fo
reign exch
ange rates
and inte
rest rate
s which
it manage
s using
derivat
ive
financial instrume
nts. The use of financial
derivatives is governed
by the Group’s policies
approved by the Boar
d of Directors,
which pro
vide
written prin
ciples on the use of f
inancial derivat
ives consistent
with
the Group’
s risk manage
ment strate
gy. The Group do
es not
use deriv
ative
financial instrume
nts for speculative pur
poses.
The Group designates cert
ain derivatives as
:

hed
ges
of the c
hange
in fa
ir va
lue of rec
ognis
ed ass
ets and
liabi
lities
(‘fai
r valu
e hedges
’);

hed
ges of hi
ghly prob
able
forecas
t transac
tions
or hedges o
f fo
reign curr
ency or inte
rest rate r
isks of firm com
mitment
s (‘cash
flo
w hedges’)
; or

hedg
es of net
i
nvestments
in foreign ope
rations
.
Derivat
ive financi
al instru
ments are
initially
measured
at fair val
ue on th
e contract da
te and ar
e subseque
ntly re-
measured to
f
air value
at each
report
ing date.
Change
s in valu
es of al
l derivati
ves of a f
inanc
ing nature are in
cluded
within inve
stment inco
me and fin
ancing
costs in
the
income st
atement unless
designat
ed in an e
ffective cash flow hedge relationship or a hed
ge of a
net investment in foreign opera
tio
ns wh
en the
effecti
ve portio
n of change
s in valu
e are defer
red to oth
er comprehe
nsive in
come. H
edge effe
ctiveness
is determine
d at the ince
ption
of the
hedge relationship, a
nd through periodic prospective
effectiveness assessments to ensure that a
n economic relationship exists b
etween the
hedged item
and hedgin
g instrume
nt. For fair val
ue hedges, t
he carrying v
alue of the hed
ged item is
also adjus
ted for change
s i
n fair value for
the hedged ri
sk, with gains
and loss
es recogn
ised in the inco
me statement fo
r the period.
Hedge account
ing is discontinue
d when
the hed
ging instrument expi
r
es or is sold, terminated, exercised or no longer qualifies f
or hedge
accounti
ng. When hedge acco
unting is discon
tinued
,
any ga
in or loss recogn
ised in other compr
ehensiv
e income at that time remai
ns in equity
and is re
cognis
ed in the inco
me stat
ement when the he
dged tran
sactio
n is
ultima
tely recogn
ised in the in
come statement
.
For cash flow hed
ges, when the hedged it
em
is recogn
ised in the in
come statem
ent, amounts pre
viously recog
nised in other
compre
hensive
income an
d accumula
ted in equity
for the hed
ging instru
ment are re
classifie
d to the in
come statement
. Howeve
r, when th
e hedged
tr
ansacti
on
results in the reco
gnition of a non-financial as
set or a non-fin
ancial
liabi
lity, the gain
s and lo
sses pre
viously r
ecognised i
n
other comprehen
sive
income an
d accumul
ated in equity
are tran
sferred fr
om equity an
d
incl
uded in the init
ial measure
ment of the cost of th
e non-fin
anc
ial asset or
non
Ǧ
financi
al liability
. If a fore
cast trans
action is n
o longer ex
pected to
occur, the g
ain or loss
accumulate
d in equity i
s recogn
ised immed
iately
in the income st
atement.
For net investment hedges
, gains and losses accumul
ated in other
compreh
ensive inco
me are in
cluded in th
e income stat
ement when
the
foreign operation is d
isposed of.
Strategic report
Governance
Financials
Other information
182
Vodafone Group Plc
Annual Report 2022
Capital ma
nagement
The following table summarises the capital of the Group at 31 March:
2022
2021
€m
€m
Borrowings (note 21)
70,092
67,760
Cash and cash equivalents (note 19)
(7,496)
(5,821)
Derivative financial instruments included in tr
ade and other receivables (note 14)
(4,626)
(3,151)
Derivative financial instruments included in tr
ade and other payables (note 15)
1,672
4,010
Short-term investments (note 13)
(4,795)
(4,007)
Collateral assets (note 13)
(698)
(3,107)
Financial liabilities und
er put option arrangements
494
492
Equity
56,977
57,816
Capital
111,620
113,992
The Group’s policy is to borrow centrally using a mixture of long-term and short-term
capital market issues and borrowing facil
ities to mee
t
anticipated fun
ding requir
ements. These bo
rrowings, together
with
cash generated from o
perations, are loaned internally or cont
ributed a
s
equity to certa
in subsidiar
ies.
Dividends from associates and to non-cont
roll
ing sha
reh
o
lders
Dividends from our associates
are generally paid at the discretion of the Board of Directors or shareholders of the individual
op
era
ting
an
d
holding
compan
ies, and
we have n
o rights to
receive
dividend
s
except where specif
ied within ce
rt
ain of the Group’s sharehol
ders
’ agreements.
Similarly
, other than on
going divide
nd obligation
s to the Kabel
Deutschland A.G.
minority shareho
lders, shoul
d they continue to
hold the
ir
minority stake, we do not have existing obligations under shareholders’ agreemen
ts to pay dividends to non-controlling interest
partners of our
subsidia
ries or joint v
entures. The a
mount of dividen
ds receive
d
and paid in the
year are dis
closed in the c
onsolidated st
ateme
nt of cash flows.
Potential cash outflows from op
tion agreements and similar arrangements
Put options
issued as p
art of the hedging str
ategy for the MC
Bs
permit the holder
s to exercise ag
ainst the Group at matur
ity of
the option if
there is a de
crease in our
share
price. Under the term
s of the options, s
ettlement must
be
made in cash
which will e
quate to the reduce
d value
of shares from the initial conversion pr
ice, adjusted for dividends declared, on 1,45
2 million (2021: 2,494 million)
shares as
at 31 March 2022.
Sale of tr
ade receivab
l
es
During the y
ear, the Gr
oup sol
d certain tr
ade recei
vables to a nu
mber of f
inancial institu
tions. Wh
ilst there ar
e no repurchase
o
bligations in
respect of these r
eceiva
bles, the Group provi
ded credit gu
arante
e
s which woul
d only be
come payabl
e if defaul
t rates were
signif
icantly
higher
than histor
ical ra
tes. The cre
dit guar
antee is not
considered
substan
tive and
substanti
ally all r
isks and r
ewards a
ssociate
d wi
th the rece
ivables
passed to the
purchaser at the da
te of sale, therefore the rece
ivables w
ere derecogni
sed. The ma
ximum
payable under the gu
arant
ees at 31
Marc
h 2022 was €1,3
41 million (202
1: €1,50
3 million). No prov
ision has be
en made in resp
ect of these
guarantees
as the likeliho
od
of a
cas
h
outflow has been assessed as remote.
Supplier financing arrangements
The Group offers suppliers the opportunity to use supply chain financing (‘SCF’). SCF allows supplier
s that decide
to use
it to
receive fun
ding
earlier than the i
nvoice due date. At
31 March
2022, t
he financial i
nstitutions t
hat run the SCF
programmes
ha
d purchase
d €2.4 billion (2
021:
€2.3 billion) of outstanding supplier invoices, principa
lly from larger suppliers. The Group does not provide any financial gua
rantees to the
financi
al institutions
under this pro
gramme and cont
inues to cash
settle suppli
er payables in a
ccordance with t
heir contr
actual
terms. As su
ch,
the programme does not change the Group’s net
debt, trade payable balances or cash flows.
The Grou
p evaluates
supplier
arrangemen
ts again
st a number of
indic
ators to asses
s if the p
ayable con
tinues to hol
d the char
acteri
stics of
a
trade p
ayable or sho
uld be cl
assifi
ed as borr
owings;
these indi
cators include
whether the pay
ment
terms exceed
the shorter of c
ustomary
paym
ent terms
in the indust
ry or 180 da
ys. At 31 Ma
rch 2022, no
ne of the payab
les subjec
t to suppli
er financing
arrangeme
nts me
t the crit
eria
to be reclassified as borrowings.
Financ
ial risk man
agement
The Group’s treasury function centrally manages the Grou
p’s
fun
din
g requirement, ne
t foreign exchange e
xposure, interest r
ate m
anagemen
t
exposures a
nd counterpa
rty risk ari
sing from inve
stments and d
eri
vativ
es. Treasury
operatio
ns are co
nducted w
ithin a fr
amework
of policies and
guideline
s authorised
and reviewed
by the Board,
most recen
tly in May 20
21. A treasury
risk committee
compr
ising
of the Group’s Chief
Financial Officer, Group Gener
al Counsel and Company Secretary, Group Financial Controller, Group
Corporate
Finance D
irector, G
roup Treasury
Director and Group Director of Financi
al Controlli
n
g and Operations meets three times a year to review tr
easury activities and
its member
s
receive management informati
on r
elati
ng to treasury ac
tivities on a quarterly basi
s. The Group’s accounting function,
which doe
s not re
port to
the Group Treasury D
irector, provides regular up
date reports of treasur
y activity to the Board. The Grou
p’s Internal Auditor
re
views the internal
control environment regularly.
No bon
ds issued by t
he Group or
the Revol
ving Cred
it Facilit
ies are subje
ct to fin
ancial co
venant rat
ios. Appr
oximat
ely €38 bil
lion (2021: €37
billion
) of issued bond
s have a change o
f control clause
. The Grou
p uses a number of
derivative i
nstruments fo
r currency and in
terest rate ris
k
manage
ment purpose
s only that a
re transacte
d by special
ist trea
sury personnel.
The Group mitigates banking s
ector credit risk b
y the use of
collateral support agreements.
Strategic report
Governance
Financials
Other information
183
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
22. Capital an
d financial risk management (continued)
The Group’s financial ri
sk management polici
es seek
to reduce the Gro
up’s exposu
re to
any future disrupti
on to financial market
s
, including an
y
future impacts from
COVID or
other macro econom
ic events.
The Grou
p has combi
ned cash an
d cash equ
ivalent
and short-
term
investments of €12.3 bi
llion, providing significant headroom ove
r short-term
liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.6 billion euro equivalent. A
s at 31 March 202
2
and aft
er hedgin
g, su
bstantial
ly all t
he Group’
s borrow
ings are h
e
ld on a fixed
interest basi
s, mitigatin
g exposure to intere
st
rate risk. The Grou
p
has no si
gnificant curren
cy exposur
es other than
positions in e
conomic hedgin
g relationshi
ps. The Grou
p’s credit ris
k under fin
ancing a
ctivitie
s is
spread acros
s a portfolio of
highly rated institutions to
reduce counterparty exposures and
derivative balances are su
bstantial
ly all
collater
alis
ed.
The Group’s o
perating activ
ities result in custom
er credit risk
, f
or which
provisions fo
r expected
credit losse
s are reco
gnised
.
Credit
risk
Credit risk
is the risk th
at a counter
party will no
t meet its obl
igations un
der a financial
asset leadin
g to a fin
ancial loss f
or the Group. The
Group is
expose
d to credit risk f
rom its o
perating
activities
and from it
s financin
g activ
ities, the
Group
considers i
ts maximum ex
posure to cre
dit risk a
t 31
March to b
e:
2022
2021
€m
€m
Cash at bank and in hand (note 19)
2,220
2,705
Money market funds (note 19)
5,276
3,116
Managed investment funds (note 13)
3,349
2,954
Current bonds and debt se
curities (note 13)
1,446
1,053
Non-current debt securities (note
13)
930
797
Collateral assets (note 13)
698
3,107
Other investments (note 13)
2,438
2,045
Derivative financial instruments (note 14)
4,626
3,151
Trade receivables (note 14)
1
6,083
5,924
Contract assets and other
receivables (note 14)
4,45
7
4,531
Performance bonds and other guarantees (note 29)
2,866
2,728
34,389
32,111
Note:
1
Includes am
ounts guaranteed under sa
les of trad
e receivables €1,341 millio
n (2021: €1,503 millio
n)
Expected credit loss
The Grou
p has finan
cial assets
classif
ied and me
asured at a
mortised co
st and fa
ir value th
rough other
comprehen
sive in
come that
are su
bject
to the expecte
d credit loss mo
del requir
ements of IFRS 9.
Cash
at bank and in hand and cer
tain other inv
estments are both cl
ass
ifi
ed and
measured at amor
tised cost and su
bject to
impa
irment requirements
. However, the identi
f
ied expecte
d credit loss i
s considered t
o be
immater
ial.
Informat
ion about ex
pected cre
dit losses fo
r trade re
ceivable
s and con
tract asse
ts can be fo
und under
‘operatin
g activit
ies’ on
pag
e 185.
Financing act
ivities
The Grou
p invests in
governmen
t securitie
s on the basi
s they gener
ate a fixed
rate of return
and are
amongst the mo
st credi
twor
thy of
investmen
ts availabl
e.
Investment
s are made
in accord
ance with e
stablishe
d internal t
rea
sury
policies which dictate the scaled maximum exposure per
mis
sible in
relation to an investm
ent’s long-term credit
rating. The Group invest
s in AAA unsecured money market m
utual funds, where the in
vestment i
s
limited to 10
% of each fund; A to
AAA government se
curities, both directly
an
d
throu
gh money market mutual fun
ds; and has two
m
anage
d
investmen
t funds that hold secu
rities
with an
average cred
it quality of AA.
In respect of financial in
struments used
by the Group’s treasury functio
n, the aggregate cre
dit risk the Group may have with on
e counterpart
y is
limited
by reference to th
e long-term cre
dit ratings a
ssigned fo
r th
at counterp
arty by Moody’s
, Fitch Rating
s and Stand
ard & Po
or’s.
Furthermore, collateral supp
ort agreements reduce the Group’s exposure to
counterparties who must post
cash collateral when
th
e
re is value
due to the Group
under outstand
ing derivat
i
ve contr
acts that ex
ceeds a co
ntractu
ally agreed
threshol
d amount. Wh
en value is
due
to the
counterparty the Group is required to post collateral on
identical terms. Such cash collateral is adjusted daily as necessary.
Strategic report
Governance
Financials
Other information
184
Vodafone Group Plc
Annual Report 2022
In the event of any default, ownership of the cash collateral
would revert to the respective holder at that point. Detailed bel
ow is the value of the
cash collateral, which is reported within curre
nt borrowi
ngs
,
held by the Group
at 31 March:
2022
2021
€m
€m
Collateral liabilities
2,914
962
In addit
ion, as
discuss
ed in note 2
9 ‘Contin
gent liabili
ties and l
egal pr
oceedings
’, the Grou
p has co
venanted to pro
vide se
curi
ty in f
avour of the
trustee of the Vodafone Grou
p UK Pension Scheme i
n respect of th
e funding def
icit in the sche
me and pledge
d security
in relatio
n to the
Indus
Towers merger. The
Group has also pledged
cash as collateral agai
n
st
derivative financial instruments as
disclosed in note 13
‘
Other
investmen
ts’.
Operating act
ivities
Customer cr
edit ri
sk is man
aged by the Gro
up’s bus
iness unit
s which e
ach have
policies,
procedur
es and co
ntrols rela
ting to cus
tomer credit
risk man
agement.
Outstandin
g trad
e receiva
bles and co
ntract as
sets ar
e regularly
reviewed
to monitor
any chan
ges in cr
edit ris
k
with
concentr
ations of
credit ris
k consi
dered to
be limited
given that the
Group’s
customer
base is large
and unrel
ated. The Gro
up a
pplies th
e
simplifi
ed appro
ach and reco
rds lif
etime expe
cted credi
t losses
for
tr
ade receiva
bles and contr
act assets. E
xpected cre
dit loss
es are measure
d
using historical ca
sh collection data for p
eriods of at leas
t 24 months wherever possible and
grouped into various c
ustomer seg
ments b
ased on
product or
customer ty
pe. The histo
rical loss rate
s are adjuste
d
where mac
roeconom
ic facto
rs, for ex
ample chan
ges in
interest r
ates or
unemployment
rates
, or other com
mercial facto
rs are exp
ected to h
ave a sign
ificant im
pact when
determining f
uture ex
pected cre
dit loss r
ates
.
For trade re
ceivables the ex
pected
credit loss pro
vision is
calculated u
sing a pro
vision matr
ix, in whi
ch the provision
increas
es as balan
ces age,
and for r
eceiv
ables pa
id in instal
ments an
d cont
ract ass
ets a weigh
ted lo
ss rate is c
alculated to
reflect th
e perio
d over wh
ich
the am
ounts
become du
e for paymen
t by the cu
stomer. Tr
ade receiv
ables and
contract
assets ar
e written off
when each
business uni
t determine
s there to
be no re
asonable
expect
ation of re
covery and e
nforce
ment act
ivity has ce
ased.
Movements in the allowance for expected credit losses during the year were as follows:
Trade
r
ecei
vables
held
Trade receivables held
at fair v
alue through
Contract assets
at amortised co
st
other comprehensive i
ncome
2022
2021
2022
2021
2022
2021
€m
€m
€m
€m
€m
€m
1 April
101
137
1,480
1,431
57
51
Exchange movements
1
2
(70)
(47)
–
–
Amounts charged to credit loss
es on financial assets
114
63
394
592
53
9
Other
1
(133)
(101)
(462)
(496)
(2)
(3)
31 March
83
101
1,342
1,480
108
57
Note:
1
Prima
rily utili
sation of the
provisio
n.
Expecte
d credit loss
es are prese
nted as net i
mpairment lo
sses wi
thin o
perating profit and sub
sequent recoveries of a
mounts prev
iously wri
tten
off are credited
against the s
ame line item.
Strategic report
Governance
Financials
Other information
185
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
22. Capital an
d financial risk management (continued)
The majority of the Gr
oup’s trade receivab
les
a
re due for maturity
wi
thin 90
days a
nd large
ly com
prise am
ounts
receivab
le from
consumers and b
usiness
customers.
The following table presents information on trade receivables past due¹ and their associated expected cred
it los
ses:
31 March 2022
Trade receivables at amortised cost past due
30
days
31–60
61–180
180
Total
Due
or
less days days
days+
€m
€m €m €m €m €m
Gross carrying amount
2,411
650
182
390
1,043
4,676
Expected credit loss allowance
(123)
(83)
(53)
(190)
(893)
(1,342)
Net carrying amount
2,288
567
129
200
150
3,334
31 March 2021
Trade receivables at amortised cost past due
30
days
31–60
61–180
180
Total
Due
or
less days days
days+
€m
€m €m €m €m €m
Gross carrying amount
2,568
717
177
405
1,290
5,157
Expected credit loss allowance
(30)
(72)
(62)
(211)
(1,
105)
(1,480)
Net carrying amount
2,538
645
115
194
185
3,677
Note:
1
Contract ass
ets relate to amoun
ts not yet due from cust
omers. These amou
nts will be reclassifi
ed
as tr
ade receivables
before they become du
e. Trade receivables at f
air value through
ot
her
comprehensive inc
ome are not mater
ially past d
ue.
Liquidity risk
Liquidity is reviewed daily on at least a 12
month rolling basis and stress tested on the assumption th
at a
ny commercial paper
outstanding
matures
and is not reis
sued. The Gr
oup maintain
s substant
ial cash
an
d cash equival
ents which at 31 Mar
ch 2022 amoun
ted to cash
€7.5
bill
ion
(2021: €5.8 billion) and undra
wn
co
mmitted facilities of €8.2 bi
llion (20
21: €8.0 billion), princip
ally euro and US dollar revo
lvin
g
credit facilities of
€4.0 billion and US$4.0 bi
llion (€3.6 billion) which mature in 2025 a
nd
2027
respectively. The Group manages liquidity risk on
non-current
borrowings b
y
maintai
ning a varied maturity profile with a cap on the level of debt maturity in any one calendar year, therefor
e minimis
ing
refinancing risk. Non-current
borrowings mature between 1 and
37 years.
The maturity profile
of the anticipat
ed future cash flows including
interest in relation to the
Group’s non-derivat
ive
f
inancial liabilities on an
undiscounted basis which, therefore, differs from both the
carrying value and fair value, is as follows:
Maturity profile
1
Tr
ade payab
les and
other
financial
Bank loans
Bonds
Lease liabilities
Ot
her
2
Total
borrowings
liabilities
3
Total
€m €m €m €m €m
€m €m
Within one year
700
3,569
3,130
6,823
14,222
16,884
31,106
In one to two years
33
6,190
2,189
417
8,829
29
8,858
In two to three years
411
3,786
1,759
207
6,163
–
6,163
In three to four years
2
5,746
1,579
199
7,526
–
7,526
In four to five years
205
6,253
1,387
678
8,523
–
8,523
In more than five years
21
43,514
4,242
136
47,913
–
47,913
1,372
69,058
14,286
8,460
93,176
16,913
110,089
Effect of discount/financing rates
(55)
(21,027)
(1,747)
(255)
(23,084)
(1)
(23,085)
31 March 2022
1,317
48,031
12,539
8,205
70,092
16,912
87,004
Within one year
674
3,774
3,419
2,516
10,383
15,304
25,687
In one to two years
174
3,329
2,142
2,575
8,220
49
8,269
In two to three years
440
5,964
1,661
399
8,464
–
8,464
In three to four years
173
2,784
1,457
166
4,580
–
4,580
In four to five years
2
5,506
1,316
199
7,023
–
7,023
In more than five years
23
45,538
4,696
986
51,243
–
51,243
1,486
66,895
14,691
6,841
89,913
15,353
105,266
Effect of discount/financing rates
(67)
(20,010)
(1,659)
(417)
(22,153)
(2)
(22,155)
31 March 2021
1,419
46,885
13,032
6,424
67,760
15,351
83,111
Notes:
1
Maturities r
eflect contractual
cash flows applicable ex
cept in the event of a change o
f control or event of defau
lt, upon whi
ch lend
ers have the r
ight, but
not the obli
gation, t
o request pa
yment
wit
hin 30 days. Thi
s also applies
to undrawn c
ommitted facilit
ies. There is no d
ebt that is s
ubject to a mate
rial advers
e
change clause (2021: €30 mil
lion
of
debt in relation to the mandator
ily
conver
tible bond that m
atured on 12 March 2022 was s
ubject to a mate
rial adverse chang
e clause which woul
d have accelerat
ed con
version of
the £1.7 billion p
rincipal recognised
in equity –
see note 21 ‘Borr
owings’).
2
Includes spectrum
licence payables with maturi
ty profile €2,319 mil
lion (2021: €381 million) w
ithin one year, €165 mil
lion
(2021: €2,171 mill
ion) in one to two
years, €199 millio
n (2021: €165
million) in two
to three years, €199 m
illion (2021: €165 mi
llion) in three to
four years, €662 mill
ion (2021: €199 mill
ion) in
four
to five years and €13
6 million (2021:
€986 million) in m
ore than five
years. Also includes €2,914
million (2021: €962
millio
n) in re
lation to cash rec
eived under co
llateral support
agreements show
n within 1
year.
3
Includes fina
ncial liabili
ties under put option arra
ngements
and non-der
ivative financ
ial liab
ilities presented w
ithin trade
and other payables.
Strategic report
Governance
Financials
Other information
186
Vodafone Group Plc
Annual Report 2022
The maturity profile of the Group’s financial derivatives (which in
clude i
nterest rate swaps
, cross-currency interest
rate swap
s and
foreign
exchange swaps) using undiscounted cas
h flows, is as follows:
2022
2021
Payable
Receivable
Total
Payable
Receivable
Tot
al
€m
€m
€m
€m
€m
€m
Within one year
(12,671)
13,470
799
(16,218)
16,864
646
In one to two years
(5,897)
6,399
502
(3,121)
3,723
602
In two to three years
(2,5
84)
3,158
574
(5,623)
5,978
355
In three to four years
(3,373)
3,864
491
(2,518)
2,903
385
In four to five years
(1,699)
2,139
440
(3,305)
3,620
315
In more than five years
(34,097)
40,129
6,032
(33,777)
37,399
3,622
(60,321)
69,159
8,838
(64,562)
70,487
5,925
Effect of discount/financing rates
(5,884)
(6,784)
Financial derivative n
et receivable/(payable)
2,954
(859)
Payab
les and receiv
ables are st
ated separa
tely in the
table above as ca
sh
set
tlement is on a gross basis.
Mark
et risk
Interest rate management
Under the Group’s interest rate ma
nagement
policy
, interest r
ates on lo
ng-term monetary a
ssets and lia
bilities ar
e principall
y
maintain
ed on a
fixed r
ate basis.
At 31 M
arch 20
22 and af
ter hed
ging, su
bstanti
ally all
of our o
uts
tandi
ng liabil
ities are hel
d on a fixed
interest rate b
asis in
acco
rdance
with
treasury policy.
For each one hun
dred basis po
int rise in mar
ket interest r
ates for
all cur
rencies i
n which t
he Group ha
d borr
owings at 3
1 March
2022
there
would be an
increase i
n profit befo
re tax by
€420 million
(2021:
€782
mi
llion) including mark to market revaluations of interes
t rate and other
derivati
ves and the potenti
al interest on cash an
d short-term
in
vestments. There
would be no m
aterial impa
ct on equity.
At 31 March 2022, the Group had limited exposure through interest
rate derivative
s and floating
rate bonds referencing LIBOR
an
d other
interbank offered rates (IBORs)
.
Foreign exchange manag
ement
As Voda
fone’s primary listing is
on the London Stock
Exchange it
s share price is quoted in sterling. Since the sterl
ing share p
rice r
epre
sent
s the
value of its future mul
ti-currency cash flows,
principally in euro, South Af
rican rand and sterling
, the Group maintains the cu
r
rency of d
ebt an
d
interest charges i
n proportion to its exp
ected future principa
l cash flows
and has a policy to hedge external foreign exchange
ri
sks on
transa
ctions denomin
ated in other curren
cies above a certai
n de minimis level.
At 31 March 2022 11% of net d
ebt was denominated
in currencies other than e
uro (6% sterling, 4% South
African rand and 1% other
). This
allows sterling, South African r
and and other debt to be serviced
in proportion to expected future cash
flo
ws a
nd therefore pro
vides a
partial
economic hedg
e against income s
tatement tr
anslation ex
posure, as int
erest cost
s will
be denominated in fo
reign currencies.
Under the Group’s foreign exchange management policy, foreign ex
ch
ange transa
ction exposure
in
Group compan
ies is gener
ally mai
nt
ained at
the lower
of €5 million p
er currency per month
or €15 million per c
urrency over a six
month period.
The Grou
p recogn
ises forei
gn exch
ange movemen
ts in equi
ty for th
e t
ranslation of ne
t investment h
edging in
struments and
balance
s treated
as inve
stments in fo
reign operat
ions. Howe
ver, ther
e i
s no net impact on equity for exch
ange rate
moveme
nts on net investm
ent hedging
instrumen
ts as there
would be an o
ffset in th
e currency t
ranslat
ion of the f
oreign operat
ion. At 3
1 March 202
2 the Group h
eld f
inan
cial lia
biliti
es
in a net in
vestment hedge ag
ainst the Group’s South
African rand
operation
s. Sensitivity to foreign
exch
ange movemen
ts on the h
edgin
g
liabilitie
s, analysed against a strengt
henin
g of the South African r
and by 13% (2021: 15
%)
would result in a decr
ease in equ
ity
of €221
million
(2021: €285
milli
on) wh
ich would be fully offset b
y foreign exchange m
ovem
ents on the h
edged
n
et ass
et
s. In addition, cash flow
hedge
s of
principally US d
oll
ar b
orrowings would result in an increase in equity of €371 million (2021: €469 million) agains
t a stren
gthe
n
ing
of US dollar
by 5% (
2021: 6%
).
The Grou
p profit an
d loss a
ccount is ex
posed to fo
reign exch
ange ri
sk within bot
h operat
ing prof
it and fin
ancing inco
me and ex
p
ense. The
principal reportin
g segment not generating income in euro is
Vodaco
m, whose functional
currency is predomin
antly South African
rand
.
Financin
g incom
e and expen
se includes f
oreign
currency
gains/loss
es incurr
ed on the tr
anslation o
f balan
ce sheet i
tems not held
in
fun
ctional
currency. These are
principally on certain borro
wings,
derivati
ves, and other investments deno
minated in sterling and Turkish lira
.
Strategic report
Governance
Financials
Other information
187
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
22. Capital an
d financial risk management (continued)
The following table details the Group’s sensiti
vity to foreign exch
ange risk. The
percentag
e movement
applied to the currency i
s based on the
average mo
vements in the previous three annual reportin
g periods.
2022
2021
€m
€m
Increase/ (decrease) in Profit before taxation
ZAR 13% change (2021: 15%)
134
152
TRY 39% change (2021: 26%)
83
87
GBP 2% change (2021: 3%)
(67)
(23)
Equity risk
There is no material e
quity risk relating to
the Group’s equity
in
vestments wh
ich are det
ailed in note 13 ‘O
ther investments
’.
The Group has hedge
d its exposure under the
subordinated m
andat
ory convertibl
e bonds to any futur
e movements in its share pri
ce
by an
option strategy
designed to hedge the economic
impact of share
price movements. As
at 31 March 2022 the Group’
s sensitivity to
a movement
of 7% (20
21: 7%) in its sh
are price wo
uld re
sult in an
increase or de
crease in pr
ofit before tax
of €36 mi
llion (2021: €
283 mil
lion).
Risk management
strategy of he
dge relati
onships
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect th
e abov
e market r
isk strategies
.
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar
, pound sterl
ing,
Australian dollar, Swiss franc, Hong Kong dollar,
Japanese yen,
Norwegian k
rona and euro and US dollar floating rate borrowings
into euro fixed
rate borrowings and hedge the fore
ign exchange spot rate and int
erest rate risk. There
are also cash flow h
edges of certain sub
sidia
ry
expenditure not deno
minated in functional cu
rrency of
the entity, to h
edge foreign exchan
ge spot
risk. Derivative finan
cial instruments
design
ated in cash flow hedg
es are cross-cur
rency intere
st rate swaps and fore
ign exchan
ge swaps and for
wards. The swap mat
urit
y dates and
liquidity profiles of the nominal cash flows match those of the underlying borrowings and exposures.
The objectiv
e of the net invest
ment hedges is to hedg
e foreign
exchan
ge risk in forei
gn operation
s. Derivat
ive financi
al instru
me
nts d
esign
ated
in net investment hedges are cross-currency interest
rate swaps and foreign exchange swaps. The hedging instruments are rolled
on an
ongoin
g basis as deter
mined by t
he nature of th
e business
.
The objective of the fair value hedges is to hed
ge a proportion of the Group’s fixed rate euro denominated borrowing to a euro
floating rate
borrowing. The swap maturity dates match those of the underlying
b
or
rowing and the nominal cash flows are converted to q
u
arterl
y payments.
Hedge effect
iveness is dete
rmined at the
inception of the he
dge
relati
onship and th
rough perio
dic pro
spective effe
ctiven
ess ass
es
sments to
ensure that
an economic rel
ationship ex
ists be
twee
n the hedged item
and hedging in
strument.
For hedges of fore
ign currency
denomina
ted borrowin
gs and investme
nts, the Group uses a co
mbinatio
n of cross-curr
ency and forei
gn
exchan
ge swaps to
hedge
its expo
sure to fo
reign exchan
ge ris
k and interest r
ate ris
k and enters
into hedg
e relationsh
ips whe
re the criti
cal ter
m
s
of the hedging instrument match with the terms of the he
dg
ed i
tem. Therefore the Group expects a highl
y effective hedging relat
ionship wi
th
the swap contracts and the value of the corresponding hedged items to change systemat
ically in
the o
pposi
te
di
re
ction in respon
se to
movements in the underlyin
g
ex
change rates and intere
st rates.
The Group therefore performs a qualitative asses
sment
of effect
i
veness. If
change
s in circum
stances af
fect the ter
ms of the he
dged item s
uch that the
critical
terms no
longer mat
ch with the c
ritical ter
ms of the hedg
ing
instrument, the
Group uses the hyp
othetical de
riva
tive method to
assess ef
fectivene
ss.
Hedge ineffectivene
ss may occur due to:
a)
The fair v
alue of the hed
ging instrument o
n the hedge relation
ship des
ignation date if
the fair value
is not nil;
b)
Changes
in the contrac
tual terms or tim
ing of the payments on the h
edged it
em; and
c)
A chan
ge in the
credit ris
k of the Gro
up or
the counterp
arty with
the hedg
ing instrumen
t.
The hedge ratio for
each design
ation will be
es
tablished by com
paring the quanti
ty of
the hedging instr
ument and the quan
tity
of the hedged
item to determin
e their relative wei
ghting; for all of the Grou
p’s exi
sting hedge relationsh
ips the hedge r
atio has been determ
in
ed as 1:1.
The fair values of the deriv
ative financial instruments are
calculated by discounting the futur
e cash flows to net present valu
es u
sing ap
propriate
market rates
and foreign curren
cy rates pre
vailing at 31 March
. Th
e valuation
basis is level 2 of the fair
value hierarchy
. Thi
s clas
sificatio
n
comprises i
tems where f
air value is
determined from in
puts other
than
quoted price
s that are observa
ble for the asset and l
iabi
l
ity, either
directly
or indir
ectly. Deriv
ative fina
ncial asset
s and liab
ilities ar
e includ
ed within tra
de and oth
er receivabl
es and tr
ade a
nd other payables in the
statement of f
inancial
position.
Strategic report
Governance
Financials
Other information
188
Vodafone Group Plc
Annual Report 2022
The following table represents the carrying val
ues and nominal amounts of derivatives in a continued hedge relationship as at 3
1 M
arch.
At 31 March 2022
Other
com
p
rehensive income
Wei
g
hted
avera
g
e
Opening
(Gain)/
Gain/(Loss)
Closing
Carrying
Carrying balance
L
oss
recycled
to balance
Eur
o
Nominal value value
1
April
deferred
to
financing
31
March
Maturity
interest
amounts Assets
L
iabilities
2021
OCI
costs
2022
1
yea
r
FX
rate
rate
€m €m €m
€m
€m
€m
€m
%
Cash flow hedges
- foreign currency
risk
3
Cross-currency and foreign exchange
swaps
US dollar bonds
20,995
2,745
10
501
(3,2
57)
1,272
(1,484)
2036
1.18
2.76
Australian dollar bonds
736
50
–
(24)
(12)
31
(5)
2024
1.56
0.92
Swiss franc bonds
624
16
1
30
(59)
49
20
2026
1.08
1.26
Pound sterling bonds
3,498
61
145
323
(239)
25
109
2043
0.86
2.97
Hong Kong dollar bonds
233
8
3
13
(18)
12
7
2028
9.08
1.48
Japanese yen bonds
78
–
6
11
(7)
(2)
2
2037
128.53
2.47
Norwegian krona bonds
241
–
16
3
(7)
7
3
2026
9.15
1.12
Foreign exchange forwards
2
244
–
69
–
(72)
3
(69)
2022
12.34
–
Cash flow hedges
- foreign currency
and interest rate risk
3
Cross currency swaps - US dollar bonds
417
24
–
8
(33)
24
(1)
2023
1.17
1.07
Cash flow hedges - interest rate risk
3
Interest rate swaps
- Euro loans
–
–
–
(1)
–
1
–
–
–
–
Net investment hedge - foreign
exchange
risk
5
Cross-currency and foreign exchange
swaps - South African rand investment
1,555
–
113
959
174
–
1,133
2022
17.29
0.31
28,621
2,904
363
1,823
(3
,530)
1,422
(285)
At 31 March 2021
Other
com
p
rehensive income
Wei
g
hted
avera
g
e
Opening
(Gain)/
Gain/(Loss)
Closing
Carrying
Carrying balance
L
oss
recycled
to balance
Eur
o
Nominal value value
1
April
deferred
to
financing
31
March
Maturity
interest
amounts Assets
L
iabilities
2020
OCI
costs
2021
1
yea
r
FX
rate
rate
€m €m €m
€m
€m
€m
€m
%
Cash flow hedges
- foreign currency
risk
3
Cross-currency and foreign exchange
swaps
US dollar bonds
18,995
621
1,070
(3,922)
5,900
(1,477)
501
2036
1.18
2.82
Australian dollar bonds
736
38
–
(26)
(102)
104
(24)
2024
1.56
0.92
Swiss franc bonds
624
–
45
28
28
(26)
30
2026
1.08
1.26
Pound sterling bonds
2,585
40
199
94
1
228
323
2047
0.89
2.59
Hong Kong dollar bonds
233
–
13
(4)
34
(17)
13
2028
9.08
1.48
Japanese yen bonds
78
–
12
6
13
(8)
11
2037
128.53
2.47
Norwegian krona bonds
241
–
22
(3)
(23)
29
3
2026
9.15
1.12
Cash flow hedges
- foreign currency
and interest rate risk
3
Cross currency swaps - US dollar bonds
417
–
8
18
52
(62)
8
2023
1.17
1.07
Cash flow hedges - interest rate risk
3
Interest rate swaps
- Euro loans
568
–
–
7
(11)
3
(1)
2021
–
1.21
Fair value hedges -
interest rate risk
4
Interest rate swap
s - Eurobonds
186
131
–
–
–
–
–
2028
–
–
Net investment hedge - foreign
exchange
risk
5
Cross-currency and foreign exchange
swaps - South African rand investment
1,785
–
23
631
328
–
959
2021
17.30
0.31
26,448
830
1,392
(3
,171)
6,220
(1,226)
1,823
Notes:
1 Fair value movement defer
red into other comprehensive in
come includes €1
,318 million loss (
2021: €1,164 million
loss) and
€1 million gain (202
1: €2 million gain) of f
oreign currency basis outside the cas
h flow
and ne
t invest
ment hedge
relatio
nships res
pectiv
ely.
2 Includes euro and US do
llar forward contracts against Tur
kish
lir
a to hedge foreign currency fore
cast expenditures in loc
al markets
. Notional amounts
of €146 million and $
109 million (€98 mi
llion) with wei
ghted
average exchange rates of 12.45 a
nd 10.95 respectively to Turkish lira.
3
For
cashflow hedges, the movement in the h
ypothetical derivative (hedged item) mirr
ors that of the hedging instrument. Hedge
ineffectiveness of
the swaps designated in a cash flow hedge during the per
iod
was €nil (2021: €nil).
4
The fair v
alue hed
ge was de-d
esigna
ted during
the fi
nancial yea
r. The c
arrying v
alue of t
he bond de
-desig
nated durin
g the fi
n
ancial year includes €66 millio
n loss (2021: €76 million loss)
of cumulative fair value
adjustment for the hedged interest risk
. Hedge ineffectiveness is €nil (2021: €8 mill
ion gain). The carrying value of bonds inc
ludes an
additional €760 milli
on loss (2021: €774
mi
llion
loss) i
n relation to fair v
alue of
other bon
ds previously designated
in fair value
hedge relationships.
5
Hedge ineffectiven
ess of swaps designated in
a n
e
t in
vestment
hedge du
ring the period was €nil (2021: €nil).
Strategic report
Governance
Financials
Other information
189
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
22. Capital an
d financial risk management (continued)
Changes i
n assets and
liabilities
arisi
ng
from fina
ncing activities
Borrowings
Derivative assets and
liabilities
Financial liabilities
under put options
Other liabilities
Assets and liabilities
arising from financing
activiti
es
€m
€m
€m
€m
€m
1 April 2021
6
6
7,760
8
8
59
4
4
92
4
4
91
6
6
9,602
Cash movements
Proceeds from issuance of long
-term borrowings
2,548
–
–
–
2,548
Repayment of borrowings
(8,248)
–
–
–
(8,248)
Net movement in short-term
borrowings
3,002
–
–
–
3,002
Net movement in derivatives
–
(293)
–
–
(293)
Interest paid
(2,246)
469
(17)
(10)
(1,804)
Purchase of treasury shares
–
–
–
(2,087)
(2,087)
Non-cash movements
Fair value movements
–
(2,631)
–
–
(2,631)
Foreign exchange
1,386
(930)
–
(15)
441
Interest costs
2,356
(428)
19
13
1,960
Lease additions
3,410
–
–
–
3,410
Other
1
124
–
–
3,106
3,230
31 March 2022
70,092
(2,954)
494
1,498
69,130
Borrowings
Derivative assets and
liabilities
Financial liabilities
under put options
Other liabilities
Assets and liabilities
arising from financing
activiti
es
€m
€m
€m
€m
€m
1 April 2020
7
7
4,925
(
(
4,409)
1
1
,850
1
1
70
7
7
2,536
Cash movements
Proceeds from issuance of long
-term borrowings
4,359
–
–
–
4,359
Repayment of borrowings
(12,2
37)
–
–
–
(12,237)
Net movement in short-term
borrowings
(2,791)
–
–
–
(2,791)
Net movement in derivatives
–
279
–
–
279
Interest paid
(2,421)
452
(141)
(42)
(2,152)
Purchase of treasury shares
–
–
–
(62)
(62)
Payments for settlement
of writte
n put options
–
–
(1,482)
–
(1,482)
Non-cash movements
Fair value movements
(9)
3,594
–
–
3,585
Foreign exchange
(1,480)
1,428
–
(2)
(54)
Interest costs
2,459
(485)
62
11
2,047
Lease additions
4,578
–
–
–
4,578
Acquisitions of subsidiaries
234
–
–
–
234
Other
1
143
–
203
416
762
31 March 2021
67,760
859
492
491
69,602
Note:
1
Movement i
n Other liabil
ities primari
l
y relate to sha
re buyback programmes.
Strategic report
Governance
Financials
Other information
190
Vodafone Group Plc
Annual Report 2022
Fai
r value an
d carry
ing valu
e info
rmation
The carryin
g value and val
uation b
asis of the Gro
up’s finan
cial asse
ts ar
e set out in notes 13 ‘O
ther investments’
, 14 ‘Trade a
nd o
the
r
receiv
ables’ and 19 ‘C
ash and cash equivale
nts’. For all
finan
cial ass
ets held at amortise
d cost the carryin
g values approx
imat
e fair value
except
as disclosed in note 13 ‘Other i
nvestments’.
The carrying value and valuation basis of the Group’s financial li
abilit
ies are set out i
n notes 15 ‘Tr
ade and other pay
ables’
and 21 ‘Borrow
ings’.
The carrying values approximate
f
air va
lue for the Grou
p’s trade payables and other payables categories. For other financial li
abili
ties a
compar
ison of fair value
and carryin
g value is dis
closed in note
21 ‘Borrowin
gs’.
Net financial instruments
The table below shows the Group’s financial assets and liabilities that are subject to offset in the balance sheet and the impa
ct of enforceable
master net
ting or simil
ar agr
eements.
At 31 March 2022
Related
amounts not set off in the balance shee
t
Gross amount
Amount set off
Amounts
present
ed in
balance sheet
Right of set off
with de
rivative
counterparties
Collateral
(liabilit
ies)/asset
s
1
Net
amount
€m €m €m €m €m €m
Derivative financial assets
4,62
6
–
4,626
(1,365)
(2,914)
347
Derivative financial liabilities
(1,672)
–
(1,672)
1,365
368
61
Total
2,954
–
2,954
–
(2,546)
408
At 31 March 2021
Related
amounts not set off in the balance shee
t
Gross amount
Amount set off
Amounts
present
ed in
balance sheet
Right of set off
with de
rivative
counterparties
Collateral
(liabilit
ies)/asset
s
1
Net
amount
€m €m €m €m €m €m
Derivative financial assets
3,15
1
–
3,151
(1,989)
(962)
200
Derivative financial liabilities
(4,010)
–
(4,010)
1,989
2,194
173
Total
(859)
–
(859)
–
1,232
373
Note:
1
Excludes col
lateral of €330 mil
lion (2021: €913
million) pledged
as initial ma
rgin that does
not offset a
gainst existin
g mark t
o mar
ket balances a
s at 31 Marc
h.
Financial a
ssets and l
iabilities a
re offset an
d the net amount
re
ported in the consolid
ated balance sheet
when there is
a legal
ly enforceable right
to offset the recognised amounts and there is
an intention to settle on a net basi
s or realise the asset and settle the l
iabi
l
i
ty simultaneousl
y.
Derivative financial instruments that do not meet the criteria for offset could be settled net in
certain circumstances under I
SDA (
‘International
Swaps and Deriva
tives Asso
ciation’)
agreements where each
par
ty
has the option to se
ttle amounts o
n a net basis in
the event of
default from
the other. Collateral may be offset and net settled against derivative financial instruments in the event of default by either
part
y. The
aforementioned collateral balances are recorded in ‘other investments’ or ‘curren
t b
orro
wings’ respectively.
23. D
irector
s and
key manag
ement comp
ensation
This not
e details t
he total amou
nts earned by th
e Company’s Di
rectors and me
mbers of the
Executive
Committee.
Directors
Aggregate emoluments of the Directors of the Company were as follo
ws
:
2022
2021 2020
€m
€m €m
Salaries and fees
4
4
4
Incentive schemes
1
3
3
2
Other benefits
2
–
–
1
7
7
7
Notes:
1
Excludes gains from lo
ng-term incentive plans.
2
Includes the va
lue of the cash allowance
ta
ken
b
y some individuals in lieu of pensi
on
co
ntribution
s.
No Director
s serving
during the yea
r exercised sh
are options
in the year end
ed 31 Marc
h 2022 (2021
: None; 2020:
None).
Strategic report
Governance
Financials
Other information
191
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
23. Directors and key management comp
ensation (continued)
Key ma
nagement compensa
tion
Aggregate compensation for key management, being the Directors and members of the Executive Comm
ittee, was as follows:
2022
2021 2020
Re
-presented
1
Re-pre
sented
1
€m
€m €m
Short-term employee bene
fits
28
28
27
Share-based payments
8
11
7
36
39
34
Note:
1
The pri
or year co
mparatives for
share-based
payments have
been
re-presented to reflec
t the market value of t
he vested shares
provided to key management person
nel in the reported period.
The previous prese
ntation was ba
sed on the va
lue of share awa
rds
granted and recognised
over the vestin
g period, however t
he gr
ants were subje
ct to various
vesting condi
tions. The revised
measurement basis
is considered to
provide a more a
ppropriate measure of
actual compen
sation received
by key management perso
nn
el in the p
eriod. The re
-presentation dec
reases the
previously disclosed amo
unts by €12 million and
€23 million for the yea
rs ended 31 March 2021
and 31 March 2020, respectively.
24. Em
ployees
This not
e shows the av
erage numb
er of people
employed b
y the Group duri
ng the ye
ar, in whic
h areas of
our busin
ess our employ
ees work an
d where they
a
r
e based. It a
lso shows tot
al e
mployment co
sts.
2022
2021 2020
Employees
Empl
oyees Empl
oyees
By activity
Operations
15,404
14,893
14,616
Selling and distribution
25,499
26,874
28,133
Customer care and
administration
56,038
54,739
52,470
96,941
96,506
95,219
By segment
Germany
15,2
56
15,798
15,199
Italy
5,765
5,818
5,980
Spain
4,194
4,257
4,316
UK
9,198
9,584
10,295
Other Europe
15,106
15,460
14,646
Vodacom
7,973
7,810
7,773
Other Markets
9,336
9,498
10,515
Vantage Towers
1
502
–
–
Common Functions
29,611
28,281
26,495
Total
96,941
96,506
95,219
Note:
1
Vantage Towers i
s a new reporting
segment for the year ended 31 Marc
h 2022. See Note 2 ‘Reve
nue disaggregation and se
gmental an
aly
sis’ for d
etails.
The cost incurre
d in respect of thes
e employees (includ
ing Directors)
was:
2022
2021 2020
€m
€m €m
Wages and salaries
4,469
4,238
4,571
Social security costs
578
549
531
Other pension costs (note 25)
168
235
226
Share-based payments (note 26)
119
135
134
Total
5,334
5,157
5,462
Strategic report
Governance
Financials
Other information
192
Vodafone Group Plc
Annual Report 2022
25. Post employm
ent benefits
The Gro
up operates a numb
er of Define
d Benefit and
Defined Con
tribution retirem
ent plans fo
r our
employe
es. The Grou
p’s largest defi
ned bene
fit plan i
s in the UK. For
further d
etails se
e ‘Critical
accounting
judg
ements and k
ey sour
ces of est
imation u
ncert
aint
y’ in note 1
‘Basis
of prep
aration’
.
Accounting policies
For defined
benefit retirement plan
s,
th
e difference between the f
a
ir value of
the plan asse
ts an
d th
e present value of the
pla
n liabil
ities is
recognised as an asset or a liability on the consolidated statement of financial position. Defined benefit plan liabilities are
assessed us
ing the
proje
cted unit funding meth
od and apply
ing the princi
pal actuari
al assumptio
ns at the
r
eportin
g period dat
e.
As
sets are valued
at m
arket value.
Actuari
al gains an
d losses
are taken
to the conso
lidated st
atement of
comprehen
sive incom
e for def
ined benefi
t plans or
consoli
dated income
statement for c
ash leaver plans as i
ncurred. For thi
s purpose,
actua
rial gains an
d
lo
sses compri
se both the effects of chan
ges
in actuar
ial
assump
tions an
d experien
ce adjust
ments arisin
g from
difference
s bet
ween the previo
us actu
arial ass
umption
s and what h
as actuall
y occurr
ed.
The return on pla
n assets, in ex
cess of
interest income
, and cost
s incurr
ed for the manage
ment of plan
assets are al
so taken to
other
comprehens
ive income
.
Other movem
ents in the net sur
plus or defi
cit are re
cognised in th
e consolid
ated income
statement, incl
uding the curren
t servic
e co
st, any past
service cos
t and the effect of any s
ettlements. The in
terest cost
les
s the expecte
d interest in
come on ass
ets is also
charge
d t
o the consolidated
income st
atement. Th
e amount ch
arged to th
e consolid
ated inco
me state
ment in respe
ct of these pl
ans is in
cluded with
in operat
in
g cost
s or in
the Grou
p’s share of
the results o
f equity ac
counted ope
rations
, as app
ropriate.
The Grou
p’s contri
butions to
define
d contrib
ution pensio
n plans
are charg
ed to the con
solidate
d income
statement
as they fal
l d
ue.
Background
At 31 March 2022 the Grou
p op
era
ted a
number of retirement plan
s for the benefit of its e
mp
loyee
s throughout
the world, with va
rying rights
and obli
gations de
pending on
the conditions a
nd pract
ices in th
e coun
tries con
cerned. The Grou
p’s philos
ophy is to pro
vide acce
ss to define
d
contribution retirement pl
ans where feasible and to manage lega
cy de
fined benefit retirement a
rrangements. Define
d benefit plan
s provi
de
benefits based on
the employees’ length of pensionable serv
ice
and their final pensionable salary or other
criteria. Defined co
ntribution plan
s
offer employees individual funds that are converted into benefit
s at the
time of retirement
.
The Group operates def
ined benefit plans in G
ermany, India, Irel
and, Italy, the UK, the Un
ited States; define
d benefit indemn
it
y plans in Gr
eece
and Turkey; and a ca
sh leaver plan i
n India. Define
d contributio
n plans are curr
ently prov
ided in Egypt
,
Ger
many, Gree
ce, Hunga
ry
, India,
Ireland, Italy, Portu
gal, South Africa, Spain and th
e UK.
Income sta
tement expense
2022
2021 2020
€m
€m €m
Defined contribution plans
197
204
180
Defined benefit plans
(29)
31
46
Total amount charged to in
come statement (note 24)
168
235
226
Define
d benefi
t plans
The Group’s re
tirement pol
icy is to prov
ide compet
itive pension pr
o
vision
, in each ope
rating co
untry, in lin
e with the m
arket m
edia
n for t
hat
locatio
n. The Group’s
preferred r
etirement prov
ision is fo
cused on
Defi
ned Contribution
arrangement
s and/or Stat
e provision fo
r
future service.
The Group’s m
ain defined
benefit fundin
g liability i
s the Vodafon
e UK Gr
oup Pension S
cheme (‘Vodafone U
K plan’). S
ince June 201
4 th
e
Vodafone U
K plan has con
sisted of two se
gregated
sections: th
e Vodafone Sect
ion and the
Cable & Wir
eless Sect
ion (‘CWW Sect
ion’
). B
oth
sections
are close
d to new entr
ants and to fu
ture accr
ual. The Gro
up also o
perates sm
aller fun
ded and unfu
nded plans in
the UK,
fun
ded an
d
unfunded plans in Germ
any and a funded
plan in Ireland. Define
d bene
fit pension
provision expo
ses the Gro
up to actuarial r
isks
such as lon
ger
than expected longevity of participants, lower than expected re
turn on inve
stments and h
igher th
an ex
pected infl
ation,
which ma
y in
crease the
liabilities or reduce the value of assets of the plans.
During 2022 the Group consolidate
d
its defined benef
it plans with
the merge
rs of a sm
all plan in
the UK, The J O Grant
& Taylor
(Lon
don) Lt
d
Staff Pensio
n Scheme, into
the Vodafone Se
ction of the
Vodafone UK plan and of the Cable and Wir
eless Emp
loyee Ben
efits Scheme in Ireland
into the Vodafone Ir
eland Pensio
n Plan.
The main defined benefit plans are administere
d by trustee boards which are legally separate from the Gr
oup a
nd con
sist of repr
esentati
ves
who are employees, former employees or are in
dependent from the Group. The tru
stee boards of the pension plans
are required by
leg
islation
to act in th
e best interest of the
participants
, set the invest
ment stra
tegy and contribut
ion rates and are
subject to statutor
y f
unding regime
s.
The Vodafone
UK plan is register
ed as an occupation
al pension pl
an
with HM
Revenue an
d Customs (‘
HMRC’) an
d is subje
ct to UK le
gislat
ion
and operates
within the fra
mework outlined
by the
Pensions Regul
ator. UK legisl
ation requ
ires that pensio
n plans are f
unded pru
dentl
y and th
at
valuation
s are und
ertaken at le
ast ever
y three year
s. Separa
te valuation
s are requ
ired for the V
odafone Se
ction and CW
W Section
.
Strategic report
Governance
Financials
Other information
193
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
25. P
ost empl
oyment b
enefits (
continu
ed)
The trustees obt
ain regular actu
arial valuation
s to check whethe
r th
e statutory funding objec
tive is met an
d whether a reco
very
plan is requir
ed
to restore funding to the level of the agreed techni
cal
provisio
ns. The 31
March 2019 triennial actuarial valuation for the Vod
afone Se
ction and
CWW Section of the Vodafone UK plan showed a net deficit of £78 million (€90 million) on the funding basis, comprising of a £17
3 million
(€20
0
million) deficit for the Vodafone Section and a £95 million (€110 million) surplus for the CW
W Section. The next triennial actu
arial valuation of
the Vodafone UK plan has an effective date of 31 March 2022.
Thes
e plan
-specific
actuarial
valuations
will d
iffer
to the
IAS 19
accounting
basis,
which
is u
sed to m
easure p
ension
assets
an
d lia
bilities
presented in the Group’s consolidat
ed s
t
atement of fi
nan
cial position.
Following the 2019 triennial valuation, the Group and trustees of th
e Vodafone UK plan agreed a funding plan to address the val
uation def
icit in
the Vodafone Section over the period to 31 March 2025 and made a cash contribution on 4 September 2020 of £80 million (€90
mill
ion
) into
the Vodafone Section
. This cash pay
ment
was invested into an annuity policy
issued by a third party insur
anc
e comp
any which in turn
entered
into a re
insurance
policy
coverin
g these risks w
ith the Grou
p’s ca
ptive in
surance com
pany, see n
ote 15 ‘Tr
ade and ot
her payabl
e
s’. No further
contri
butions ar
e due in res
pect of t
he deficit rev
ealed a
t the 2019
valuation
.
Funding plans are individually agreed for each of the Group’s ot
her defined benefit plans with the respecti
ve
tru
stees or
gover
n
ing b
oard
,
taking
into accoun
t local r
egulatory r
equ
irements
. It is expected
that ordinary contribut
i
ons of €49 mill
ion will be paid into
the Gro
up’s def
ined benefi
t
plans dur
ing the ye
ar ending 3
1 March 20
23. The Group h
as also
provided
certain gu
arantees
in respect o
f the Vodafo
ne UK plan
;
further details
are provided in note 29
‘Contingent
liab
ilities and legal proceedings’ to the consolidated financial statements.
The investment strategy for the UK plans is controlle
d b
y th
e trus
tees in consultation with the
Group and the plans have no dir
ect investm
ents
in the Group’s equity securities or
in property or other assets currently
used by the Group. The allocation of assets between d
iffere
nt cl
asses of
investmen
t is reviewed regul
arly and is
a key factor in t
he trus
tee investment po
licy. The trust
ees ai
m to
ac
hieve the plan’s i
nvestment
objective
s through inves
ting partly in
a diversif
ied mix of gro
wth assets
which, over the l
ong term, a
re expected
to grow in va
lue
by
more
tha
n
the low risk
assets. Th
e low risk
assets in
clude cash
and gilts
,
inflation
and interest rat
e hedging
and in substan
ce insured
p
ensioner annuity
policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan and an in
sured pe
n
sioner annuity policy in the V
odafone
Ireland Pensio
n Plan. A numb
er of investment
managers
are appoin
t
ed to promo
te diversif
ication by
assets, o
rganisat
ion and in
ve
stment styl
e
and curren
t market condit
ions and trends are reg
ularly assesse
d, whic
h may lead to ad
justments in the
asset allo
cation.
Actuarial
assumptio
ns
The Group’s
plan liabil
ities are me
asured
usin
g the projected unit cr
edit method u
sing the princ
ipal actuari
al assump
tions set
ou
t be
lo
w:
2022
2021 2020
%
% %
Weighted a
verage actua
rial assumpti
ons used at
31 March
1
:
Rate of inflation
2
3.3
2.9
2.2
Rate of increase in salaries
3
3.1
2.7
2.5
Discount rate
2.5
1.8
2.0
Notes:
1
Figures shown
represent a weighted averag
e assumption o
f the individual plans.
2
The ra
te of increase in p
ensions in pa
yment and d
eferr
ed revaluation are d
ependent on the
rate of infla
tion.
3
Relates onl
y to schemes o
pen to future accrual pri
marily in Germ
any, Ireland and I
ndia.
Mortality
assumptio
ns used ar
e based on re
commenda
tions from th
e individ
ual local
actuar
ies which in
clude adju
stments fo
r the e
xperience of
the Group where a
ppropriate. The
Group’s larg
est pl
an is the Vo
dafon
e UK plan. Fur
ther life ex
pectan
cies ass
umed for the U
K pla
ns are
23.4/
25.4 yea
rs (2021:
23.4/25.
4 years) for a
male/f
emale pensi
oner curr
ently aged
6
5 years
a
nd 25.4/27.5
years (202
1: 25.4/
27.
4 ye
ars)
from age 65 for a male/female non
-pensioner member currently aged
40.
Charges
made to the co
nsolidate
d income s
tatement an
d consol
idated statem
ent of com
prehensive
income (‘SO
CI’) on the b
asis of t
he
assumptio
ns stated above are
:
2022
2021 2020
€m
€m €m
Current service cost
38
37
37
Net
p
ast service (credit)/costs
1
(71)
2
–
Net interest char
g
e/(income)
4
(8)
9
Total net (credit)/
cost inclu
ded within staff costs
(2
9)
31
46
Actuarial
g
ains/(losses) reco
g
nised in the SOCI
627
(686)
640
Note:
1
A cha
nge in Germany re
lating to t
he provision of
death and disab
ility benefits e
ffective from 1 Ap
ril 2021 resulted
in a past
service c
redit of €49 mi
llion; further net pas
t service credits we
re
recognised in the year ende
d 31 March 2022 for the Voda
fone UK plan relating
to the offer of a pe
nsion increase exchange to a
ll
members at re
tirement and benefit
clarifications.
Duration
of the b
enefit ob
ligations
The w
eighted averag
e duration of th
e defined
be
nefit obligat
ion at 31 Marc
h 2022 is 21
years (2021:
21 years).
Strategic report
Governance
Financials
Other information
194
Vodafone Group Plc
Annual Report 2022
Fair val
ue of the
assets a
nd presen
t value
of the li
abilities
of the pla
ns
The amount included in the
consolidated statement of financial position arising from the Grou
p’s obligations in respect of its
defined benefit
plans is as follows:
Asset
s
L
iabilities
Net surplus/
(defic
it)
€m
€m
€m
1 April 2020
6,906
(6,754)
152
Service cost
–
(39)
(39)
Interest income/(cost)
137
(129)
8
Return on plan assets excluding interest income
466
–
466
Actuarial losses arisi
ng from changes in financial assumptions
–
(1,118)
(1,118)
Actuarial losses
arising from experience adjustments
–
(34)
(34)
Employer cash contributions
125
–
125
Member cash contributions
10
(10)
–
Benefits paid
(243)
243
–
Exchange rate movements
244
(249)
(5)
Other movements
(13)
5
(8)
31 March 2021
7,632
(8,085)
(453)
Service cost
–
(38)
(38)
Past service credit
–
71
71
Interest income/(cost)
140
(144)
(4)
Return on plan assets excluding interest income
58
–
58
Actuarial gains arising from ch
anges in demographic assumptions
–
7
7
Actuarial gains arising from ch
anges in financial assumptions
–
483
483
Actuarial gains arising
from experience ad
justments
–
79
79
Employer cash contributions
60
–
60
Member cash contributions
17
(17)
–
Benefits paid
(241)
241
–
Exchange rate movements
52
(45)
7
Other movements
(3)
7
4
31 March 2022
7,715
(7,441)
274
An analysis of the net surplus/(defi
cit)
is provided below for the Group as a whole.
2022
2021
€m
€m
Analysis of ne
t
surplu
s/(deficit):
Total fair value of plan assets
7,715
7,632
Present value of funded plan liabilities
(7,337)
(7,9
68)
Net surplus/(deficit) for funded plans
378
(336)
Present value of unfunded plan liabilities
(104)
(117)
Net surplus/(deficit)
274
(453)
Net surplus/(deficit) is analysed as:
Assets
1
555
60
Liabilities
(281)
(513)
Note:
1 Pension a
ssets are deemed to be
recoverable and there are
no adjustme
nts in respec
t of minimum f
unding requiremen
ts as eco
nomic be
nefits are a
vailable to
t
he
Group
ei
ther in the form of
future
refunds or, for plans
still open to benefit accr
ual, in th
e form of possible redu
ctions in futur
e
cont
ributions.
An analysis of net surplus/(deficit) is provi
ded below
for
the Vodafone UK plan, which is a funded plan. As part of the merger
of the Vodafone UK
plan an
d the Cable
and Wir
eless Wo
rldwide Re
tirement Pl
an (‘CWWR
P’) plan on
6 June 201
4 the asset
s and lia
bilitie
s of the CWW S
ection are
segregate
d from the Vodafone Section an
d hence are reported se
parately below.
CWW Section
Vod
afone Section
2022
2021
2022
2021
€m
€m
€m
€m
Analysis of ne
t
surplu
s/(deficit):
Total fair value of plan assets
2,850
2,912
3,399
3,298
Present value of plan liabilities
(2,565)
(2,852)
(3,1
66)
(3,457)
Net surplus/(deficit)
285
60
233
(159)
Net surplus/(deficit) are analysed as:
Assets
285
60
233
–
Liabilities
–
–
–
(159)
Strategic report
Governance
Financials
Other information
195
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
25. P
ost empl
oyment b
enefits (
continu
ed)
Fai
r value o
f plan asse
ts
2022
2021
€m
€m
Cash and cash equivalents
55
247
Equity investments:
With quoted prices in an active market
849
1,376
Without quoted prices in an active market
359
294
Debt instruments:
With quoted prices in an active market
1,334
4,589
Without quoted prices in an active market
317
559
Property:
With quoted prices in an active market
29
26
Without quoted prices in an active market
460
494
Derivatives:
1
Without quoted prices in an active market
2,19
5
(1,557)
Investment fund
1,161
604
Annuity policies
With quoted prices in an active market
34
4
Without quoted prices
922
996
Total
7,715
7,632
Note:
1
De
rivatives inc
lude collate
ral held
in the
form
of cash. Assets
are valued using
‘level 2’ inpu
ts under IFRS
13 ‘Fair Val
ue M
easurement’ principles and classified as unquoted accordingly.
The fair v
alue of pl
an assets
, which
have been me
asured in
accordan
ce with IFRS
13 ‘Fa
ir Value Mea
surement’
, are analy
sed by as
set categ
ory
above and ar
e
su
bdivided by
assets that have a quoted mar
ket price
in an acti
ve market and those that do
not, such as investm
en
t funds. Whe
re
avail
able, the fa
ir values ar
e quoted
prices (e.
g. listed e
qui
ty, so
vereign d
ebt and
corporate
bonds)
. Unlisted i
nvestment
s wit
hout
quoted
pri
ces in
an active
market (
e.g. pri
vate equity
) are inclu
ded at valu
es prov
ided by th
e fund man
ager in acco
rdance w
ith relevan
t guid
ance
. Other
significant assets are valued based
on obs
ervable inputs such as yield curves. The Vodafone UK plan annuity policies fully matc
h the pension
obligations of those pensioners insured and th
erefore are set equal to the present value of the rel
ated obligations. Investment
funds of €1,161
million
at 31 March 202
2 include in
vestments in
diversified al
ternative
beta funds held
in the Vodafone
Section of th
e Vodafone
UK plan
.
The ac
tual return on
plan assets over
the year to 31
March 2
022 was
a gain
of €198
million
(2021: €60
3 million g
ain).
Sensitiv
ity analysis
Measurement of the Group’s define
d be
n
efit retirement obligation is sensitive to changes in certain key ass
ump
tions
. The sensit
ivity analysis
below shows
how
a reas
onably possible increase or decrease in a
par
ticular as
sumption would
, in isolation
, result in an incre
as
e or decre
ase in
the p
resent va
lue of the defi
ned benefit ob
ligation as a
t 31 March 2022
.
Rate of inflation
Rate of increase in
salaries
Discount
rate
Life expectancy
Decrease by 0.5%
Increase by 0.5%
Decrease by 0.5%
Incr
ease b
y 0.5%
De
crease by 0.5%
Increase by 0.5%
Decrease by 1 year
Increa
se by 1 year
€m €m €m €m €m €m
€m
€m
(Decrease)/increa
se in present
(547)
552
(1)
1
770
(668)
(248)
248
value of defined benefit obligation
1
Note:
1
T
he sensitivity ana
lysis may not be rep
resentativ
e of an actua
l change in t
he defined benefit
obliga
tion as it is
unlikely th
at changes in assum
ptions would o
ccur in isolation
of one another. In
presenting this sensit
ivity analysis, the
chang
e in the present value o
f the defined benefit oblig
ation has been calcu
lated on
the same basis
as prior yea
rs using the projec
ted unit credit me
thod at
the end of the yea
r, which is the
same as that ap
plied in calcu
la
ting the de
fined be
nefit ob
liga
tion
liability reco
gnised in th
e statemen
t of financ
ial positi
on. The rate o
f inflation as
sumption
sensitivity fa
ctors in t
he impact of c
hanges to all
assumptions
re
lating to inf
lation including the ra
te of increase in salarie
s, pens
ion increases
and deferred revaluat
ions.
Strategic report
Governance
Financials
Other information
196
Vodafone Group Plc
Annual Report 2022
26. Sh
are-based
payment
s
The Grou
p has a nu
mber of sh
are pla
ns used to aw
ard shar
es to Ex
ecutive
Direc
tors and empl
oyees
as part
of the
ir remuneration
packa
ge. A charge is re
cognised over the
vesting period
i
n the
consolidate
d income
statemen
t to record the cost o
f these, based on
the fair value of the
award on the gran
t date.
Accounting policies
The G
roup issues
equity-
settled s
hare-based
awards to c
ertain
employ
ees. Equity-s
ettled share-
based award
s are measured at fair
value
(excluding the effect of non-market-based vesting conditions) at
the date of grant. The fa
ir val
ue dete
rmined at th
e grant date
of the equi
ty-
settled sh
are-based
award is ex
pensed on a str
aight-line
basis ov
er the
vesting period, based on the Group’
s estimate of the sh
ares that
will
eventually vest and adjusted for the effect of non-market-based
vestin
g conditions
.
A corres
ponding incre
ase in additional pa
id
-in capit
al is als
o
recognised.
Some shar
e awards ha
ve an atta
ched marke
t condit
ion, based o
n total shareh
older re
turn (‘TSR’)
, which is
taken into
account whe
n calcula
ting
the fair value of the share awards. The valuation for the TSR is based on Vodafone’s ranking within the same group of companies
, where
possible
, over th
e
past f
ive years.
The fair value of awards
of non-ve
sted shares
is a ca
l
cula
tion of
the
closin
g price of the Com
pan
y’s sh
ares on the day
prior to
the
grant date,
adjuste
d for the pre
sent valu
e of the del
ay in re
ceiving d
ividends
where appro
priate
.
The maximum
aggregate n
umber of ordina
ry shares whi
ch may be is
su
ed in respect of sha
re options or
share plans
will not (w
ithou
t
sharehol
der approv
al) exceed:

10% of the ordina
ry share capital of
the Company in issue
immediate
ly prior to the date
of grant, when aggregated with the tota
l number of
ordin
ary shares
which have
been all
ocated in the
precedin
g ten year pe
riod under
all plan
s; and

5% of the ordin
ary share ca
pital of t
he Company in is
sue immedi
atel
y pr
ior t
o the da
te of g
rant,
when a
ggregated wit
h the total
number of
ordinary sh
ares which have
been allocate
d in
the preced
ing ten year period un
der all
plans, other th
an any plan
s which are o
per
ated
on an all-employee basis.
Share opti
ons
Vo
dafo
ne Sh
ares
ave P
lan
Under the Vod
afone Sharesa
ve Plan UK staff
may acquire sh
ares in
the Company throu
gh monthly savings of up to £375 over a thr
ee
and/or
five ye
ar period. Th
e savings m
ay
then be u
sed to purch
ase shares at th
e option pr
ice, which i
s set at the be
ginning of the in
vitation pe
riod and
usually at a discount of 20% to the then prevailing market price of the
Company’s
shares.
Share p
lans
Voda
fone G
roup
exec
utiv
e plan
s
Under the V
odafone Glo
bal In
centive Pl
an awards of
shares
are gran
ted to Dire
ctors and c
ertain e
mployees. Th
e rele
ase of these
shares is
condit
ional upon cont
inued emplo
yment and for some awar
ds achie
vement of certain performance targets me
asured over a three year
peri
od.
Vo
daf
one S
hare
Ince
nt
ive
Pl
an
Following a review of the UK all-employee plans it was decided that with effect from 1 April 2017 employees would no longer be
abl
e to
contri
bute to the Shar
e Incenti
ve Plan an
d would ther
efore no lon
ger recei
ve matchin
g shares. I
ndividu
als who hol
d shares in th
e plan will
continu
e to
re
ceive dividen
d shares.
Strategic report
Governance
Financials
Other information
197
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
26. Share-based paym
ents (continued)
Movement
s in ou
tstanding ord
inary
share opti
ons
Ordinary share options
2022
2021 2020
Millions
Millions Millions
1 April
62
53
46
Granted during the year
20
35
39
Forfeited during the year
(2)
(1)
(1)
Exercised during the year
(1)
–
–
Expired during the year
(18)
(25)
(31)
31 March
61
62
53
Weighted a
verage exerci
se pric
e:
1 April
£1.0
7
£1.19
£1.40
Granted during the year
£0.95
£1.03
£1.06
Forfeited during the year
£1.06
£1.16
£1.36
Exercised during the year
£1.17
£1.23
£1.50
Expired during the year
£1.10
£1.27
£1.34
31 March
£1.02
£1.07
£1.19
Summar
y of options outs
tanding
31 March 2022
31 March 2021
Outsta
nding
shares
Weighted
average
exercise
Weighted
remaining
average
contractual
life
Outstanding
shares
Weighted
average
exercise
Weighted
remain
ing
average
contractual
life
Millions
price
Mon
ths
Millions price
Mont
hs
Vodafone Group Sharesave Plan:
£0.91 – £1.89
61
£1.02
24
62
£1.07
30
Share awa
rds
Movements in non-vested shares are as follows:
2022
2021 2020
Weighted
Weighted
Weighted
average fair
average fair
averag
e fair
valu
e at
v
alue at
value at
Millions
gran
t date
Millions
grant
date
Millions
grant d
ate
1 April
267
£1.20
245
£1.41
200
£1.92
Granted
113
£1.17
108
£0.99
135
£1.00
Vested
(68)
£1.44
(56)
£1.56
(44)
£2.10
Forfeited
(42)
£1.52
(30)
£1.10
(46)
£1.76
31 March
270
£1.07
267
£1.20
245
£1.41
Other
information
The total fair
value of sh
ares vested
during the year en
ded 31 March
2022 was £
98 million
(2021: £10
8 million; 2
020: £92 millio
n)
.
The compen
sation cost in
cluded in
the consolid
ated income
stat
ement
in respect o
f share o
ptions a
nd share
plans was
€119 mill
io
n (2021:
€135 m
illion; 2020: €1
34 million) whic
h is comprised p
rincipally of equity-settled
transactions.
The av
erage sh
are price for
the year en
ded 31 Ma
rch 2022
was
122.1 pen
ce (2021: 12
0.8 penc
e; 2020: 135.
9 pence).
Strategic report
Governance
Financials
Other information
198
Vodafone Group Plc
Annual Report 2022
27. A
cquisi
tion
s and dis
posals
The note
below provi
des de
tails of a
cquisitio
n and dispo
sal transacti
ons for t
he curr
ent year as w
ell as thos
e
complet
ed in t
he prior ye
ar. For
further det
ails see ‘C
ritical a
ccounting j
udgements
and key sour
ces of esti
mation
uncert
ainty’ i
n note 1 ‘Ba
sis of pre
paratio
n’ to the co
nsoli
dated finan
cial stat
ements.
Accounting policies
Business combinatio
ns
Acquisitions o
f subsidiaries are acco
unted
for using the acquisition method. The cost
of the acquisition is measured at the agg
regate of the fair
values at the date of exchange of as
sets given, liabilities
inc
urred or assumed and equity instruments issue
d by the Group. Ac
q
uisition-related costs
are recognised in the consolidated income statement as incurred.
The a
cquiree’s identifiable assets and liabilities are recogni
sed at their fair v
alues at
the acquisition
date, which is th
e date on which co
ntrol is transferr
ed to the Group. Goodwil
l is measured as t
he excess of the
sum of the
consideration trans
ferred, the amount of any non-controlling
interests in the acq
uiree and the fair value of the Group’s
previo
usly held equi
ty
interest in the acqu
iree, if any, over t
he net amounts of iden
tifiable assets
acquired and lia
bilities assumed at t
he acquisiti
on date. The interest of the
non-controlling sha
reholders in the
ac
quiree may initially b
e measured either at fai
r value or at the non-controlling
shareholders’ prop
ortion of the
net fair value o
f the identifiable a
ssets acquired, l
iabilities and
contingent l
iabilities assu
med. The choice of measur
ement basis is made on an
acquisition-by
-acquisition ba
sis.
Acquisi
t
ion of interes
ts from non-controlling
shareholders
In transact
ions with non-controlling pa
rties that do not result in a cha
nge in control, the difference betw
een the fair value o
f the consideration paid
or received and the
amount by whic
h the non-contr
o
lling interest is adjusted is
recogn
ised in equity.
Acquisitions
The aggrega
te cash consideration i
n respect of purchases of s
ubsidiaries, net of cas
h acquired, is as follow
s:
2022
2021
€m
€m
Cash consider
ation paid
Acquisitions during the year
–
138
Net cash acquired
–
(2)
–
136
During the prior year ended 31 Marc
h 2021, the Group completed ac
quisitions for an aggre
gate consideration o
f €178 million, sat
isfied by the
transfer of equity interests in certain of
the Group’s subs
idiaries. The aggrega
te fair values of goodw
ill, identifiable ass
ets
, lia
bilities and non-
controlling interes
ts recognised on ac
quisition were €82 mi
llion, €468 million,
€312 million a
nd €60 million, resp
ectively. In
addition, the Group p
aid
€138 million in respect of acquisi
tions
completed in prior periods.
Disposa
ls
The difference between the
carrying value of the net assets dis
posed of and the fair v
alue of consideration recei
ved is recorde
d as
a gain or loss on
disposal. Fo
reign exchan
ge translatio
n gains or losses rel
ating to
subsidiari
es, joint arrangements
and associates th
at the Gro
up has disposed of
, and
that have pre
viously recor
ded in other comprehe
nsive income or
expense, are also reco
gnised as part o
f the gain or loss o
n disp
osal.
The aggr
e
ga
te cash considerat
ion in respect of the disp
osal of subsidiaries,
net of cash disposed,
is as follows:
2022
2021
€m
€m
Cash consider
ation receive
d
Vodafone New Zealand
–
(37)
Tower infrastructure in Italy
–
192
Other disposals during the period
–
3
Net cash disposed
–
(1)
–
157
Other
transact
ions wi
th non-
controlli
ng share
holders
in sub
sidiaries
2022
2021
€m
€m
Cash consider
ation received/(paid)
Vantage Towers IPO
217
2,000
Vantage Towers Greece
–
(288)
Other
(28)
(49)
189
1,663
Strategic report
Governance
Financials
Other information
199
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
27. Acqu
isition
s and disposa
ls (conti
nued)
Vantage Towers IPO
In the c
omparativ
e period, th
e Group co
mpleted an in
itial public
offering of Vanta
ge Towers AG, with the
first day of trad
ing o
n the
Regul
ated Market of
the Frankfur
t Stock Excha
nge being 18 Marc
h 2021. The of
fer consis
ted solely o
f a secondary
sell-down of
ex
isting
shar
es held by Vodafone G
mbH. Cash cons
ideration of €2,000 mill
ion was
received in the c
omparative period.
A furth
er €217 mill
ion was
received in Ap
ril 2021, following c
ompletion of the market
st
a
bilisatio
n period desc
ribed in the V
antage Tow
ers pros
pectus.
Vantage Towers Greece
In the compa
rative period on 25 Mar
ch 2021, the Gro
up exercised its option to
purchase the remaining
38% of Vantage To
wers Gree
ce for
cash consid
eration of
€288 million
, taking i
ts shar
eholding to 100%.
Other matters
Vo
dafo
ne E
gypt
On 10 Nov
ember 2021, the Gro
up announced t
hat it had agr
eed to transf
er its 55% sha
reholding
in Vodafon
e Egypt to its s
ubsidiar
y,
Vodacom Gro
up Limited (‘Vodaco
m’).
The total considerati
on is €2,365
million of which approxi
matel
y €1
,892 million will b
e settled by the issue of 242
million new
ordinary
Vodacom shares t
o Vodafone at an i
ssue pr
ice of ZAR 135.75 per
share; the remaining
€473 million
will be settled i
n cash. As a
result,
Vodafone’s owne
rship in Vod
acom will increase f
rom 60.5% to 6
5.1%.
Under the terms of the s
ale and purchase
agreement, the cash e
lement of the purchase co
n
sideration wi
ll be adjusted for any mov
ement in
the net debt and agreed working capital of Voda
fone Egypt between
signing
and closing. Completion of the transaction is subject
to a
number of regulatory approvals, which are expected in the near term.
28. C
ommitments
A comm
itment is a contractual
obl
igation to make
a payment in the f
uture, mainly in rela
tion to agreemen
ts to
buy assets such as
mobile devices,
network infrastructure and IT systems and leases that have not commenced.
These
amounts ar
e not re
corded i
n the cons
olidat
ed statem
ent of fi
nancial p
osition si
nce we hav
e not yet
receiv
ed the g
oods or s
ervices fr
om the
supplier
. The am
ounts below
are the mi
nimu
m amounts t
hat we ar
e
committ
ed to pay
.
Capital
commitments
Com
p
an
y
and subsidiari
es
Share of
j
oint o
p
eration
s Grou
p
2022
2021
2022
2021
2022
2021
€m
€m
€m
€m
€m
€m
Contracts placed for future capital
expenditure not provid
ed in the fi
nancial
statements
1
4,38
8
3,993
140
133
4,527
4,126
Note:
1 Commitment includes contrac
ts placed for proper
ty, plant and equipment and intangib
le assets.
Leases entered into by the Grou
p but not commenced at 3
1 March 2022 are discl
os
ed in no
te 20 ‘Leases’. Inclu
ded in capital comm
itments is an
amount of
€331 million relatin
g to spectrum acquis
ition commitments i
n Vodacom. €197 mil
lion of this spe
ctrum acquisit
ion commi
tment was
settled subsequent to year-end.
29. Contingent li
abilities and lega
l proceedi
ngs
Contingen
t liabilities are
potential future
cash outflo
ws
, wher
e the
likeli
hood of pa
yment i
s consi
dered mor
e th
an
remote
, but is not considered probab
le or cannot be mea
sured reliably.
2022
2021
€m
€m
Performance bonds
1
430
381
Other guarantees
2
2,436
2,347
Notes:
1 Performance bonds require the Group
to ma
ke payments to third parties in the even
t that the Grou
p does not perform what is
expected of it
under the te
rms of any re
lated contract
s or commer
cial
arrangements.
2 Other
guarantees
principall
y comprise Vod
afone Grou
p Plc’s gu
arantee of t
he Group’
s 50% share of a US
$3.5 billion
loan fac
ility (2021: US$3.5 billion loan facility),
whic
h forms part of the Group’s overall
joint venture investment in TPG Telecom Ltd
. The Group’s share of
these loan balances is inc
luded
in the net investment in join
t venture
(see note 12 ‘Investments in
associa
tes and joint arrangements’).
Other g
uarantees al
so inclu
de INR42.5 bill
ion
(2021: INR42.5 b
illion) in relation to the
secondary pled
ge over sh
ares owned by
Vodafone Group in Indus Towers.
See page 201.
Strategic report
Governance
Financials
Other information
200
Vodafone Group Plc
Annual Report 2022
29. Contingent liabilities and legal pro
ceedings (continued)
UK pensio
n schemes
The Group’s mai
n defined benefit plan is the Voda
fone UK Group Pe
nsion Scheme (‘Voda
fone UK Plan’) which has two segregated sec
tions, the
Vodafone Section and the CWW Sec
tion, as detail
ed in note 25 ‘Post em
ployment benefits’.
The Group has covenanted to provide security
in f
avour of both the Vo
dafone Section and CWW Sectio
n when they are in
a deficit
positio
n. The
deficit is measu
red on a prescr
ibed basis agreed
between the Group and tr
ustee, which differ
s from the accou
nting basis reporte
d in note 25 ‘Post
employment benefi
ts’. The Group prov
ides surety bonds as the security.
The level of the security ha
s vari
ed since inception in line with
the movement in the Vodafone UK
Plan deficit. Due to the impr
oved funding position
of the Plan the level of security has redu
ced signific
antly over the year
. As at 31 March 2022 the
Vodafone U
K Plan retains sec
urity
over €237
million (notional value) for the Vodafone
Section and no security
is currently required for the CWW Section. The security may b
e subst
ituted either
on a volu
ntary or mandato
ry basis. The Compan
y has also provi
ded two guarantees to
the Vodafone Sectio
n of
the Vodafone UK Plan for a
combined
value up to €1.48
bi
llion to prov
ide security over the deficit under certai
n defined circu
mstance
s, including insolven
cy of the employers.
The Company has also ag
reed a simil
ar guarantee of up to €1.48 billion for the CWW Section.
An additional smal
ler UK defined benefit plan, the THU
S Plc Group Sche
me, has a guarantee from the Company f
or up to €118 milli
on.
Vodafone Idea
As part of the agreement to merge Vodafone
India and Idea C
ellular
in 2017, the partie
s agreed a mech
anism for
payments between
the Group and
Vodafone Idea Limited (‘VIL’) pursuant to the difference b
etween
the crystallisation of certa
in
identified contingent liabiliti
es in rela
tion to legal,
regulatory, tax and other matters, and refun
ds relating to Vodafon
e India and Idea Cellular. Cash
payments or cash rece
ipts relating to these matters
must have been made or
received by VIL befo
re any amount become
s due
from or owed to the Group.
Any future payments b
y the Grou
p to VIL as
a result o
f this agreement would o
nly be made after sat
isfaction o
f this and other co
ntractual conditio
ns.
The Group’s po
tential exposure un
der this mechanism is c
apped at INR 64 bill
ion (€743
million) following p
ayments made und
er this mechanism
from Vo
dafone to VIL, in the y
ear ended 31 March
2021, totall
ing INR 19 bil
lion (€235 mil
lion). On 15 Se
ptember 2021, the Go
ver
nment of India
announced a relief pa
ckage and a series of
reforms designed to
improve th
e liquidity and financ
ial heal
th of the telecom sector. The reforms includ
e
a four-year moratorium on spec
trum and AGR payments and the opti
on to convert payments due on spectrum and AGR payments to equi
ty at the
end of the mor
atorium period, with interest o
n due amounts being conv
ertible during the moratorium
period; VIL elected to
accep
t the options in
October and No
vember 2021, r
espectively.
VIL raised INR 45 bill
ion (€524 million
) via the issue of new equi
ty in March 2022, mo
st of which was used to settl
e amounts du
e to Indus. VIL
remains i
n need of additional liq
uidity support from its lender
s and inten
ds to raise additional
equ
ity capital. There are sign
ifi
cant uncert
ainties in
relation to VIL’s a
bility
to make paymen
ts in relation to any
remaining liabi
lities covered by
the mechanism and
no further cas
h payments are
considered pro
bable from th
e Group as at 31 March
2022. The carryin
g value of
the Group’s
investment in VIL is
€nil
and the Group is reco
rding no
further
share of losses in
respect of VIL. The Grou
p’s potential ex
posure to liabilitie
s within VIL i
s capped by th
e mechanism
described abo
ve;
consequently, contingent l
iabilities arising
from litiga
tion in India concerning op
er
ations of Vodafone India are not reported.
Indus Towers
VIL’s ability to satisfy certa
in payment ob
ligations under its Master Services Agreem
ents with Indus Towe
rs (the ‘MSAs’) is unc
ertain and depends on
a number of factor
s including its abili
ty to raise additional
fun
ding. Under the terms of the Indus and Bharti Infratel merger
in
November 2020
, a
security package was a
greed for the benefi
t of the newly created merged
entity, Indus Towers, which co
uld be
invoked in the eve
nt that VIL was
unable to mak
e MSA payments. The securi
ty package included the follow
ing elements:
-
A prepayment in cash o
f INR 24 billio
n (€279 million) by
VIL to Indus Tower
s in respect of its pay
ment obliga
tions that are und
is
puted, due and
payable under the MSAs after
the merger cl
osing. The prepaymen
t was full
y utilised during the y
ear to 31 March 202
2;
-
A primary pledge over
190.7 mill
ion shares owned by
Vodafone Gro
up in Indus Towers
having a
value of INR 47
billion (€544
million) as at 31
March 20
21; and
-
A sec
ondary pledge over shares owned by Vodafone Group in Indus
Towers (ranking behind Vodafone’
s existing lenders for the outs
tanding
bank borro
wings of €1.4 bil
lion as at 31 M
arch 2022 secure
d against Indi
an assets utilised to f
und Vodafone’
s contribution to
t
he VIL rights issue
in 2019) (‘th
e Bank Borro
wings’) with a max
imum liability
cap of INR
42.5 billion
(€504 million
).
In the event of non-payment of relev
ant MSA obligations by VIL,
Ind
us To
wers would have recour
se to the primary pl
edge shares a
nd, after
repayment o
f the Bank Borrowing
s in full
, any secondary pledged sh
ares, up to the val
ue of the liability
cap.
During February and March 20
22, the Group announced the dispo
sal of
the 190.
7 million shares that we
re su
bject to the primary p
ledge in two
transactions for a
combined INR 38
.1 billion (€445 m
illion). The Group invested INR 3
3.7 billion (€393
million) of the proceeds
by subscribin
g to
newly issued VIL equity,
which VIL immediately used to partia
lly settle outstanding MS
A obligations to Indus
Towers. This tran
saction resul
ted in an
equivalent partial release
of th
e primary pledge, with
the remaining INR 4.4
billion (€52 million) p
roceeds of the share
disposal remaining se
cured for
further utilisation by Indus Towers.
Indus Towers has recourse against the second
ary pledge to the maximum liability c
ap,
from any proceeds re
maining after the sett
leme
nt of the
Bank Borr
owings.
Strategic report
Governance
Financials
Other information
201
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
29. Contingent liabilities and legal proceedings
(continued)
Legal Proce
edings
The Group is curr
ently invol
ved in a number of l
egal pro
ceedings,
inclu
ding inquiries fro
m, or discuss
ions with, go
vernment aut
hor
ities that ar
e
incidental to
its operatio
ns.
Legal proceedings where the Group considers that the likelihood of mater
ia
l futu
re outflows of ca
sh or other resour
ces i
s more
th
an remote are
disclosed below. Where the Group assesses that it is probable that the
outcome of legal proceedings will result in a financial
outflow, and a
reliable estimate can be made of the amount
of that obligation
, a
pro
vision is recognised for these amounts.
In all cases, d
etermining the probability of s
uccessfully defending
a
claim
against the Group i
nvolves the application of judge
ment as
the
outcome is inherently un
certain. The determin
ation of the value
of any future outflows of cash or other res
ources, and the timi
ng of
suc
h
outflows, involves the use of estimates. The costs incurred in complex legal proceedin
gs,
re
ga
rdless of out
come, ca
n
be
signifi
can
t.
The Group is no
t involved in
any materi
al proceedin
gs in which
an
y of the Group’s Directors, members of senior management or af
filiates are
either a party adver
se to
the Gro
up or have a material interest ad
verse to the Group.
Indian tax cases
In
January 2012, the Supr
eme Court of India found
against the India
n
tax authority and
in fav
our of Vodafon
e International Holdin
gs BV
(‘VIHBV’)
in proceedin
gs brought after the
Indian ta
x authority alleged
potential liability unde
r the In
come Tax Act 1961 for the failure
by VIHBV to ded
uct
withholding tax from consideration paid to the Hutchison Telecommunications International Limite
d group (‘H
TIL’)
in c
onn
ection
with its
2007
disposal to VIHBV of its interests in a wholly-owned Cayman Island incorpora
t
ed subsidiary that i
n
directly held interests in Vo
dafone India
Limited (‘Vodafone Indi
a’).
The Finance Act 2
012 of India, which amended va
rious provisions of the Income
Tax Act 1961 with retro
spective effect, contained
pro
visions
intended to tax any gain on transf
er of shares in a non-Indian comp
any, which derives substantial value fro
m underlying Indian
assets, su
ch as
VIHBV’s transaction with HTIL in 2007. Further, it sought to su
bject a purchaser, such as VIHBV, to a retrospective obligation
to withhold tax. On 3
January 2013, VIHBV received a lett
er from the Indian tax author
ity re
minding
it of the tax deman
d raised
prior to the Supr
eme
Court of Ind
ia’s
judgement an
d updating the
interest eleme
nt of
that demand to a
total amount of INR142
billio
n, which incl
uded princi
pal and interest as
calcul
ated by
the Indi
an tax au
thori
ty but d
id not in
clude pen
alties.
On 12 Febr
uary
2016, VI
HBV rec
eived a no
tice date
d 4 Febr
uary 2
016 of an
outstanding tax demand of INR221 billion (plus interest). On 29 September 2017, VIHBV received an electronically generated dema
nd in
respect of alleg
ed principal
, interest and pe
nalties in the amount of INR190.7 bi
llion.
VIHBV initiated
arbitration p
roceedings under th
e Netherlands-Ind
ia
Bilateral Investm
ent Treaty (‘Dutch BI
T’) on 17 April 2014.
In September
2020, th
e arbitrat
ion tribu
nal issued
its award unan
imously rul
in
g in Vodafone’s fa
vour. The Indian Government a
pplied to set a
side the
award
primaril
y on jurisdic
tional groun
ds. The pro
ceedings hav
e been
transfe
rred to the Singapore I
n
ternation
al Commercial Court (‘SI
CC’).
Separa
tely, on 24
January
2017, V
odafone
Group Pl
c and Vo
dafone Co
nsolidate
d Holdin
gs Limit
ed form
ally
commenced ar
bitrat
ion wi
th the
Indian Governmen
t under the Unite
d Kingdom-India Bilater
al Investme
nt Trea
ty (‘UK BIT’). Although relat
ing to the same underlyi
ng facts as th
e
claim und
er the Dutch
BIT, the UK
BIT claim
is a separ
ate and d
istinct cl
aim under
a different
treaty an
d incl
udes indepen
dent
clai
ms r
elati
ng
to
disputes between the
Indian tax authority an
d Vo
dafone India Services Priv
ate Limited (‘VISPL’)
(see below). In 2020, following attempts by the
Indian Government to obtain a court injun
ction preventing Vodafone from progressin
g
the
UK BIT arbitration, the Delhi High Cour
t ord
ered
that
Vodafon
e shall
proceed with t
he UK BIT
arbitrat
ion only if
the award
already
publish
ed under the Dut
ch BIT is set
aside.
In August 20
21 the Indian
Parliame
nt passed new l
egislat
ion which af
fects the ret
rospectiv
e effect of the
Finance Act
2012. The
impact of this
legislat
ion on the
Dutch and UK BIT
proceedings, in partic
ular
whether th
e Indian Govern
ment will w
ithdraw it
s challen
ge to the
arbitrat
ion
award in the D
utch BIT, is un
known as of the date of thi
s report
. The SICC grante
d a stay in th
e
Dutch BIT pr
oceedings to 15 Ju
ne 2022
.
VIHBV and Vodafone Group Plc will continue to d
efend
vigorously
any allegation that VIHBV or Vodafone India is liable to pay ta
x in connectio
n
with the tr
ansactio
n with HTI
L. Based on
the facts an
d circums
tances of
this matter
, includ
ing the out
come of legal
procee
dings
to date, the
Group considers th
at it is more likel
y than not that no present obligat
ion exists at 31 March 2022.
VISPL t
ax c
laims
VISPL is involved in a
number of tax cases. The total value of the claims is approximately €500 million plus interest, and penalties of up to 300%
of the principal.
Of the indi
vidual tax
claims, the
most sign
ificant is in the amount of approximately €254
million (plus interest of €614 millio
n), which VISPL
h
as
been asse
ssed as o
wing in res
pect of (i) a t
ransfer pri
cing marg
in
charged for the international call centre
of HTIL prior to t
he 2007 tran
sactio
n
with Vodafone for HTIL assets in India; (ii) the sale of the inte
rnational call centre by VISPL to HTIL; and (iii) t
he acquisit
ion of and/or the alleged
transfer of options held by VISPL in Vodafone India. A stay of the tax demand on a deposit of £20 million and a corporate guara
ntee by VIHBV
for the balance of tax assessed are in place. On 8 October 2015, the Bombay High C
o
urt ruled in favour of Vodafone in relation
to the options
and the call centre sale. The Indian Tax Authority has appealed
to the Suprem
e Court of India.
The appeal hearin
g has been ad
jo
urned
indefinitely
.
While there is som
e uncertainty as to the outcom
e of
the tax cases in
volvin
g VISPL, the Group
believes it
has valid defences and does not
consider it probable that a financial outflow will be required to settle th
ese cases.
Strategic report
Governance
Financials
Other information
202
Vodafone Group Plc
Annual Report 2022
Other cases in the Group
Spain
and U
K: TO
T v Vo
dafone
Grou
p Plc, V
GSL, an
d Vo
dafone U
K
The Grou
p has been def
ending
cases bro
ught a
gainst it in
Spain and th
e UK by TOT Po
wer Cont
rol and To
p Optimi
zed Technolo
gies (
jo
intly
‘TOT’)
allegin
g breach of co
nfiden
tiality and
patent inf
ringemen
t. In No
vember 2021
TOT withdr
ew all of
its clai
ms agains
t the
Group in Spain
and the UK as part of an agreed set
tlement.
Further background rel
ating to these claims
is provided in the G
roup’s Annual Report for the f
inancial year ended 31 March
2021
.
Germany:
Kabel Deutsc
hland t
akeover - class
actions
The German courts have been dete
rmining the adequacy of the ma
ndatory cash offer made to minority shareholders in Vodafone’s ta
keover of
Kabel Deut
schland
. Hearing
s took place
in May 20
19 and a
decision w
as deliver
ed in Novem
ber 201
9 in Vodafo
ne’s favo
ur, reject
in
g all cl
aims
by minor
ity shareho
lders. A
number of
shareholders
appeale
d which
was reje
cted by the co
urt in Decem
ber 2021. S
everal m
inority
shareholders have filed a further appeal before the Feder
al Court of Justice. The appeal process is ongoing. While the outcome
is uncert
ain, the
Group believes it has valid defences and that the out
come of the appeal will
be favourable to Vodafone.
Italy
: Iliad v V
odafon
e Italy
In July 2019, Iliad filed a claim for €500
million against Vodafone Italy in the Civil Court of Milan. The cl
aim alleges anti-c
ompetit
ive behaviou
r in
relation to
portabili
ty and cert
ain advert
ising campai
gns by Vod
a
fone Italy. Prel
iminary hear
ings have take
n place, incl
uding o
ne at
which the
Court reject
ed Iliad’s
applicatio
n for a ceas
e and desi
st order aga
inst alleged
misleadin
g advert
ising by Vo
dafone. The m
ain he
arin
g on the
merits of the cla
im
took pl
ace on 8 June 2021 and we are waitin
g to receive the judge
ment.
The Group is currently unable to estimate any possible loss in
this
claim in the
event of an
adverse ju
dgement but wh
ile the ou
tcom
e is
uncertain
, the Grou
p believes
it has val
id defenc
es and that
it is prob
able that no
present o
bligatio
n exists.
Greec
e: Papist
as H
oldings S
A, Mo
bile
Trade S
tores (
forme
rly P
apistas
SA) an
d Ath
anasio
s and L
ouki
a Papis
tas v V
odafon
e Gre
ece
In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by them, filed several new claims against Vodafone Gr
eece wit
h a
total value of approximately €330 milli
on for purported damage caused by the alleged abuse of dominance and wrongful terminatio
n
of a
franch
ise arrangemen
t with a Papis
tas company
. Lawsuits whi
ch the
Pap
istas claim
ants had pre
viously bro
ught against Vod
afone Gr
oup Plc and
certain Dir
ectors and off
icers of Vodafo
ne were withdr
awn. Vodafo
ne Greece filed a counter cla
im and all claims wer
e heard in F
ebruar
y 2020.
All of the Pa
pistas clai
ms were reje
cted by the Gre
ek Court bec
aus
e the stamp duty p
ayments requir
ed to
have the merit
s of the
case
considere
d had not
been made. Vo
dafone G
reece’s coun
ter claim
was also re
jected. The
Papistas
claimant
s and Vodafo
ne Greece h
a
ve eac
h
filed
appeals an
d, subje
ct to the Pa
pistas cl
aimants p
aying the
requ
isite stamp
duty, the hearing on
the merits of these a
ppeal
s will t
ake pl
ace in
earl
y 2023.
The amount cl
aimed in the
se lawsuits
is substan
tial and, if
th
e claimant
s are succe
ssful, the to
tal potential l
iability could b
e materi
al. However
,
we are cont
inuing vi
gorously to def
end the cla
ims and base
d on the pro
gress of the liti
gation so f
ar the Group belie
ves that it
is highly unlikely
that there will
be an adver
se ruling for the Grou
p. On this ba
sis, the Gro
up does not expec
t the outcome of
these claims to
hav
e a material
finan
cial imp
act.
UK: Ph
ones 4U
in Ad
ministr
ation v
Vod
afone L
imit
ed and V
odafon
e Gr
oup Plc
and Ot
hers
In December 2018, the
administrators of former UK indire
ct seller,
Phones 4U,
sued the three main
UK mobile netwo
rk operator
s (
‘MNOs’),
including Vodafone, and their parent companies. The administrators allege collusion between
the MNOs to pull their business fro
m Phone
s 4U
thereby causing its collapse. Vodafone and the other defen
dants
filed their de
fences in April 2019
and the Administrators
filed
the
ir replies in
October 20
19. Disclosure h
as taken pla
ce and witn
ess statemen
ts
were filed in De
cember 2021
. The judge has
also ordere
d that t
here should
be a split trial bet
ween liability
an
d damage
s. The f
irst trial starte
d in May 2022.
Taking into
account al
l availabl
e evidence, t
he Group asse
sses it to
be more likely than not that a present obligation does not
exist and th
at the
allegations of collusion are completely without merit; the Group is vigoro
usly de
fendin
g the claim.
The value of the claim is n
ot p
leaded
but
we
understand it to be the total value of the business, allegedly equivalent to approximately £1 billion with the addition of alle
ged exemplary
damages
. Vodafone’s al
leged share o
f the liability i
s also not ple
aded. T
he Group is not a
ble to
estimate
any poss
ible loss in the e
vent of an
adverse ju
dgment.
Strategic report
Governance
Financials
Other information
203
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
30. Related party transactions
The Group
has a
number of related parties including jo
i
nt
arrangements an
d associ
ates, pe
nsion schemes and
Director
s and Exe
cutive Co
mmittee me
mbers (se
e note 12 ‘Inv
estments in ass
ociat
es and joint ar
rangem
ents’,
note 25 ‘P
ost employm
ent be
nefits’ and n
ote 23 ‘Dir
ectors a
nd key man
agement
compens
ation’).
Transacti
ons with
joint ar
rangeme
nts and
associat
es
Related party transactions with the Group’s
joint arran
gements and asso
ciates primaril
y compri
se fees for the use of products a
nd services in
cluding
network airti
me and access charges, fees for the prov
ision of network infra
structure and cash pooling
arrangements. No related
party
transactions
have been entered into d
uring the year
which might reasona
bly affect a
ny decisions made
by the users of these co
nsolidated fina
n
cial statements
except as disclo
sed below.
2022
2021 2020
€m
€m
€m
Sales of goods and
services to associates
20
14
32
Purchase of goods and services from associates
10
5
4
Sales of goods and servic
es to joint arrangements
221
203
305
Purchase of goods and serv
ices from joint arrangements
298
109
97
Interest income receivable
from joint arrangements
1
48
65
71
Interest expense payable to joint arrangements
1
52
56
–
Trade balances owed:
by associates
8
3
4
to associates
6
5
4
by joint arrangements
139
88
157
to joint arrangements
34
31
37
Other balances owed
by associates
80
56
–
Other balances owed
by joint arrangements
1
1,080
955
1,083
Other balances owed
to joint arrangements
2
1,561
1,575
2,017
Notes:
1
Amounts arise primarily through Vod
afoneZiggo, TPG Telec
om Limited
and INWIT S.p.A.. Interest is paid in line w
ith market rates
.
2
Amounts
are primarily in relation to le
ases of tower space from INWIT S.p.A.
Dividends
received from associates
and joint ventures are d
isclosed in the consolidated
statement of cash flows
.
Transactions with Directors ot
her th
a
n compensation
During the three years end
ed 31 March 2022 a
nd as of 17 May 2022, no Direc
tor nor any other executive offi
cer, nor any associat
e of any Director
or any other executive offi
cer, was indebted to the Group
. During the three years ended 31
March 2022 and as of 17 May 20
22, th
e Group has not
been a party to any
other material tr
ansaction, or
proposed transact
ions, in wh
ich any member of the key ma
nagement personne
l (
including
Directors,
any other executive office
r
, s
enior manager, any sp
ouse or relative of a
ny of the foregoing or any rel
ative of suc
h
spouse) h
ad or was to
have a direct or indirect materi
al interest.
Strategic report
Governance
Financials
Other information
204
Vodafone Group Plc
Annual Report 2022
31. Re
lated undert
akings
A full l
ist of all of our subsidiarie
s, joint arrangemen
ts and associated undertak
i
ngs is deta
iled below.
A full list o
f subsid
iaries, joint
arrangements and
associated
un
dertakings (as define
d in the Large and Medium-sized Co
mpanies
and Groups
(Accoun
ts and Repo
rts) Regul
ations 2
008) as at 31 M
arch 202
2 is detail
ed below. N
o subsidi
aries are ex
cluded fr
om the Grou
p con
solidation.
Unless ot
herwise state
d the Company
’s subsidi
aries all ha
ve shar
e capi
tal con
sistin
g solely o
f ordin
ary shar
es and are in
direct
ly hel
d. The
percentage held by Group companies reflect both the proportion of no
mina
l capital and voting rights unle
ss otherwise stated. Su
mmarise
d
financi
al information
is provided
in respect of
the Group’s mo
st
significa
nt joint arrangement
s and asso
ciates in not
e 12 ‘Inve
stment
s in
associ
ates and jo
int arran
gements’.
Subsidiari
es
Accounting policies
A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Co
mpany has
existing
rights that give it
the curren
t ability to
direct th
e activitie
s that affe
ct the Company
’s retur
ns and expo
sure or r
ights to var
iable re
turns from
the e
ntity. The result
s
of subsid
iaries acqu
ired or dispo
sed of durin
g the year are in
cl
uded in t
he consolid
ated income s
tatement f
rom the effecti
ve da
te of ac
quisitio
n
or up to the
effect
ive date of d
isposal,
as appro
priate. Whe
re necessar
y, adju
stments are
made to th
e financi
al statements of
subsidi
aries t
o
bring their ac
counting policies into l
ine with those used
by
the Group. All intra-group tr
ansa
ctions, bal
ances, income and expe
nses
are
eliminated on con
solidation. Non-co
ntrolling interests in the net
assets of consolid
ated subsidia
ries are ide
ntified separat
ely
from the Group’s
equity therein. Non-controlling inte
rests
consist of the amount of those interests at the date of the ori
gi
n
al business combina
tion a
nd t
he no
n-
controlling shareholder’s share of changes in equity since the d
ate of the combination. Total comprehensive income is attr
ibute
d to non-
controlling interests even if this results in the non-controllin
g i
nterest
s having
a deficit balance.
Company name
% of shar
e
class held
b
y
Group
Companie
s
Share clas
s
A
lbani
a
Autost
rada Tirane-Durres, Rruga
: “Pavaresia”, Nr 61, Kas
har,
Tirana, Albania
Vodafone Albania Sh.A
99.94
Ordinary sha
res
Lagjia
Kongresi Përmetit, Bulev
ardi
"Jakov X
oxa", pall
ati nr. 5,
kati nr. 1
, Fier, Alban
ia
ApNet SHP
K
99.94
Ordinar
y shares
Rruga "Ibrahim Rug
ova", Sky Tower, K
ati i 5, Hyrja 2, Tiranë,
1000, Al
bania
_
VOIS Albania ShpK.
100.
0
0
Ordinar
y shares
A
rgentin
a
Cerrito 348,
5 to B, C1010A
AH, Buenos A
ires, Arge
ntina
CWGNL S.A. (in process of dissolution)
100.0
0
Ordinar
y share
s
A
ustrali
a
Mills Oak
ley, Level 7, 151
Clarence S
treet, Sydn
ey NSW 2000,
Austra
lia
Vodafone Enterp
rise Austra
lia Pty
Limited
100.0
0
Ordinar
y shares
A
ustria
c/o Stoli
tzka & Partn
er Rechtsanw
älte OG
,
Kärnt
ner Ring 12, 3. St
ock, 1010, Wien, A
ustria
Vodafone Enterpris
e Austria GmbH
100.0
0
Ordinar
y shares
Bahrain
RSM Bahrain, 3rd Floor Falcon Tower, D
iplomatic Area,
Manama
, PO BOX 11816,
Bahrain
Vodafone Enterpris
e Bahrain W.L.L.
100.0
0
Ordinar
y shares
Belgium
Company name
% of shar
e
class held
b
y
Group
Companie
s
Share clas
s
Malta Hous
e, rue Archimède 25, 100
0 Bruxelles, Belgium
Vodafone Belgium SA/NV
100.0
0
Ordinar
y shares
Brazil
Avenida
Cidade Ja
rdim, 400, 7th an
d 20th Floors,
Jardim P
aulistano
, São Paulo, Braz
il, 01454-000
Vodafone Serviços Empresa
riais Brasil
Ltda.
100.0
0
Ordinar
y shares
Av Jos
é Rocha Bonfim
, 214, Cond Pra
ça Cap
ital – Edifício
Toronto
, sls 228/229 1
3080-900 Jardim
Santa Gen
ebra –
Campinas,
São Paulo, B
razil
Cobra do Brasil Serviç
os de
Telemàtic
a ltda. (in proce
ss
of dissolution)
70.0
0
Ordinar
y shares
Av Pa
ulista 37 – 4º an
dar, Sala
427, Bela Vista
, CEP, 01311 –
902, São P
aulo, Braz
il
Vodafone Emp
resa Brasil
Telecomuni
cações Ltda
100.0
0
Ordinar
y shares
Bulgaria
10 Tsar Osvoboditel Blv
d., 3rd
Floor, Spredets Region, Sofia,
1000, Bulg
aria
Vodafone Enterpris
e Bulgaria EOOD
100.0
0
Ordinar
y shares
Canada
c/o ARC I
nformatio
n Services In
c., 3-84 Castl
ebury Cr
escent,
Toronto ON M2H 1W8, Canada
Vodafone Canada Inc.
100.0
0
Common
shares
Cayman Isl
ands
One Nex
us Way, C
amana Bay,
Grand Caym
an, KY1-9005,
Cayman Islands
CGP Investments (Holdings) Limit
ed
100.0
0
Ordinar
y shares
Company name
% of shar
e
class held
b
y
Group
Companie
s
Share clas
s
Chile
222 Miraflo
res, P.28, S
antiago,
Metrop, 97-763, C
hile
Vodafone Enterpris
e Chile S.A.
100.0
0
Ordinar
y shares
China
Building 21,
11, Kang
ding St.,
BDA, Beijing, 100
176 – China
Vodafone Automo
tive Technologi
es
(Beijing) Co,
Ltd
100.0
0
Ordinar
y shares
Level 9, Tower
2, China Centr
al Place, Room 9
41, No.79 Ji
anguo
Road, Chaoyang
District, Beiji
ng, 100025, China
Vodafone Enterp
rise
Communicati
ons Technical Se
rvice
(Shangha
i
) Co.
, Ltd. Beijing Branch
2
100.0
0
Branch
Room 1603,
16
th
Floor, 1200 Pudong Avenue, Free
Trade Zone,
Shangh
ai, China
Vodafone Enterp
rise
Communicati
ons Technical Se
rvice
(Shanghai
) Co., Ltd.
100.0
0
Ordinar
y shares
Congo, The
Democrati
c Republic
of the
292 Avenue de La Justice, Commune de la Gombe
, Kinshasa, Th
e
Democratic
Republic of the Congo
Vodacom C
ongo (RDC) SA
5
30.85
Ordinary
shares
Building Comimmo II Ground Floor Right, 31
57 Boulevard du 30
Juin, Commune de la Gombe, Kinshas
a, DRC Congo, The
Democratic
Republic of the
Vodacas
h S.A.
5
30.85
Ordinary
shares
Cyprus
Ali R
Ŧ
za Efendi Caddesi No:33/A Ortaköy, Lefko
Ɣ
a, Cyprus
Vodafone Evde Operations Ltd
100.0
0
Ordinar
y shares
Vodafone Mobile Operations Limited
100.
0
0
Ordinar
y shares
Strategic report
Governance
Financials
Other information
205
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
31. R
elate
d undert
aking
s (cont
inued
)
Czech Repub
lic
n
Ą
m
Ģ
stí Junkových 2, Prague 5, Czech Republic, 155 00, Czech
Republic
Nadace Vod
afone
ç
esk
¼
Republika
100.00
Truste
e
Oskar Mobil S.R.O.
100.00
Ordinary shar
es
Vodafone Czech Republic A.S.
100.00
Ordinary shares
Vodafone Enterp
rise Europe (UK
)
Limited - Czech
Branch
2
100.00 Branc
h
Praha
4, Nusle, Z
ávišova 502/5,
14000, Czec
h Republic
Vantage Towers 2 s.r.o.
100.00
Ordinary sha
re
s
Vantage Towe
rs s.r.o.
4
81.74
Ordinary
share
s
Z
¼
vi
w
ova Real
Estate, s.r.o.
100.00
Ordinary share
s
Denmark
Tuborg Boulevard 12, 2900, Hellerup, D
enmark
Vodafone Enterpris
e Denmark A/S
100.0
0
Ordinary
(DKK
)
shares
Egypt
37 Kas
er El Nil St, 4th
. Floor, Cairo,
Egypt
Starnet 55.0
0
Ordinar
y shares
54 El Batal Ahmed Abed
El
Aziz, Mohands
een, Giza, Egypt
Sarmady Communic
ations
55.0
0
Ordinar
y shares
Building no. 210
9 “VHUB1”, Smart
Village, Cairo Alex
andria,
Egypt
Vodafone International Services LLC
100.0
0
Ordinar
y shares
Site N
o 15/3C, Cent
ral Axis, 6t
h October C
ity, Egypt
Vodafone Egyp
t
Telecommuni
cations S.A.E.
55.0
0
Ordinar
y shares
Smart Villa
ge C3 Vodafone Building, Eg
ypt
Vodafone Data
55.0
0
Ordinar
y shares
V
odafo
ne Build
ing Zahraa EL M
aadi, Build
ing A, Se
rvice Area D,
Maadi, C
airo, Egypt
Vodafone For Trading
54.95
Ordinary shares
Finland
c/o Eversh
eds Asianajot
oimisto Oy, Fabianinka
tu 29 B, Helsinki,
00100, Fin
land
Vodafone Enterpris
e Finland OY
100.0
0
Ordinar
y share
s
France
1300 route
de Cretes, L
e WTC, Bat I1,
06560, Valb
onne Soph,
France
Vodafone Automo
tive Telematics
Development S.A.S
100.0
0
Ordinar
y shares
EuroPlaza Tour, 20 Avenue Andr
e Prothin, La Défense Cedex-
Franc
e (149153), 92
400, Courbev
oie, Franc
e
Vodafone Automotive France S.A.S
100.0
0
Ordinar
y shares
Vodafone Enterpris
e France SAS
100.0
0
New eur
o
shares
Rue Champollion, 22
300, Lannion, Fran
ce
Apollo Submari
ne Cable System Ltd
–
French Bra
nch
2
100.0
0
Branc
h
Germ
any
Aach
ener Str. 746-750,
50933, Köln,
Germany
Arena Sport Re
chte Marketin
g GmbH
i.L (in liquidation)
100.0
0
Ordinar
y share
s
Altes F
orsthaus 2, 67661, K
aisersla
utern, German
y
TKS Tel
epost Kabel-S
ervice
Kaiser
slautern GmbH
3
93.8
4
Ordinar
y shares
Betast
raße 6-8, 85774 Un
terföhring, G
ermany
Kabel Deutschland Holding AG
93.8
4
Ordinar
y shares
Vodafon
e Customer Ca
re GmbH
3
93.8
4
Ordinar
y shares
Vodafone De
utschland Gmb
H
93.8
4
Ordinar
y shares
Buschu
rweg 4, 76870, Ka
ndel, Germany
Vodafone Automo
tive Deutsch
land
GmbH
100.0
0
Ordinar
y shares
Ferdinan
d-Braun-P
latz 1, 40549, Du
esseldorf,
Germany
Vodafone Enterpris
e Germany GmbH
100.0
0
Ordinar
y share
s
Vodafone GmbH
100.0
0
Ordinar
y
A
shares,
Ordinar
y
B share
s
Vodafone Group Services GmbH
100.0
0
Ordinar
y shares
Vodafone Ins
titut für Gese
llschaft und
Kommunikation G
mbH
100.0
0
Ordinar
y shares
Vodafone Sti
ftung Deuts
chland
Gemeinnutzige Gmb
H
100.0
0
Ordinar
y shares
Vodafone Vierte Verwaltungs AG
100.
0
0
Ordinar
y shares
Vodafone West GmbH
100.
0
0
Ordinar
y share
s
Friedrich-
Wilhelm-St
rasse 2, 38100, Bra
unschwei
g, Germany
KABELCOM Br
aunschweig
Gesells
chaft Fur Breitb
andkabel-
Kommunikation Mi
t Beschrankte
r
Haftu
ng
3
93.8
4
Ordinar
y shares
Helmholtz
staße. 2-
9, Gerbäude 10
587, Berlin,
Germany
Vodafone Service GmbH
100.0
0
Ordinar
y share
s
Holzma
rkt 1, 50676, Kö
ln, North Rhine-
Westpha
lia, Germany
Grandcentrix Gm
bH
100.0
0
Ordinar
y share
s
Nobels
trasse 55, 180
59, Rost
ock, Germany
p
Urb
ana Teleunion
q
Rostock GmbH &
Co.KG
3
65.6
9
Ordinar
y shares
Prinzen
allee 11-13, 40
549, Düsseldo
rf, Germany
Vantage Towers
AG
81.74
Ordinary share
s
Vantage Towe
rs Erste Verwal
tungsgese
llschaft
mbH
4
81.74 Ordinary
share
s
Vantage Towe
rs Zweite
Verwaltungs
gesellschaft mbH
4
81.74 Ordinary
share
s
Seilerst
rasse 18, 3844
0, Wolfsburg,
Germany
KABELCOM Wolfsb
urg Gesellschaf
t
Fur Breitband
kabel-Kommunika
tion
Mit Beschran
kter Haftung
3
93.8
4
Ordinar
y shares
Ghana
Manet Tower A, South Liberation
Link, Airport City, Accra,
Ghana
Ghana Tele
communications
Company Limited
70.0
0
Ordinar
y shares,
Preferenc
e
share
s
Vodacom Busi
ness (Ghana) Li
mited
70.0
0
Ordinar
y shares,
Preferenc
e
share
s
Vodafone Ghan
a Mobile Finan
cial
Services Li
mited
70.0
0
Ordinar
y share
s
Teleco
m House, Nsawam R
oad, Accra
-North,
Greater Ac
cra Region,
PMB 221, Ghan
a
National Communi
cations Backb
one
Company Limited
70.0
0
Ordinar
y shares
Greece
1-3 Tza
vella str, 152 31 Hala
ndri, Athens, Greece
Vodafone-Panaf
on Hellenic
Telecommuni
cations Comp
any S.A.
99.87
Ordinary shares
12,5 km National Road Athens – Lamia,
Metamorfo
si / Athens,
14452, Greece
Vodafone Innovus
S.A.
99.87
Ord
inary shares
2 Adrianeiou
str, Athen
s, 11525, Greec
e
Vantage Towers
Single Member
Societe Anonyme
4
81.74
Ordinary shares
Pireos 163 &
Ehelidon, A
thens, 1185
4, Greece
360 Connect S.A.
99.87
Ordinary shar
es
Guernsey
Martello
Court, Admiral Park, St.
Peter Port, GY1
3HB,
Guernsey
FB Holdings Limited
100.0
0
Ordinar
y shares
Le Bunt Holdings Limited
100.
0
0
Ordinar
y shares
Silver Stream Investmen
ts Limited
100.0
0
Ordinar
y shares
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey
VBA Holdings
Limited
5
60.5
0
Ordinar
y share
s
and non-voti
ng,
irredee
mable,
non-cumulati
v
e
preferenc
e
share
s
VBA Internati
onal Limited
5
60.5
0
Ordinar
y shares,
and non-voti
ng,
irredee
mable,
non-conve
rtible,
non-cumulati
v
e
preferenc
e
share
s
Hong Kong
Level 24, Dors
et House, Ta
ikoo Place,
979 King
͛
s Road, Quarry
Bay, Hong K
ong
Vodafone Enterpris
e Hong Kong Ltd
100.0
0
Ordinar
y shares
Hungary
40-44 Hung
aria Krt.,
Budapest,
H-1087, Hung
ary
VSSB Vodafone Szolgáltató Közp
ont
Budapest
Zártk
ör
ň
en M
ň
köd
Ĭ
Részv
énytársaság
100.0
0
Register
ed
ordinary shares
6 Lechner Ö
dön fasor,
Budapest,
1096, Hungary
Vantage Towe
rs Zártkör
ň
en M
ň
köd
Ĭ
Részvé
nytársaság
4
81.74
Ordinary share
s
Vodafone Magy
arország Táv
közlési
Zártkör
ň
en M
ň
köd
Ĭ
Részv
énytársaság
100.0
0
Series
A
Register
ed
common shares
Strategic report
Governance
Financials
Other information
206
Vodafone Group Plc
Annual Report 2022
Ind
ia
10th Floo
r, Tower A&B, Glob
al Technology Park, (Maple
Tree
Building), Marat
hahalli Outer Ring
Road, Devarabeesana
halli
Village, V
arthur Hobli, Beng
aluru, Karna
taka, 560103,
India
Cable & Wire
less Networks Ind
ia
Private Limit
ed
100.0
0
Equity
share
s
Cable and
Wireless (Indi
a) Limited –
Branch
2
100.0
0
Branch
Cable and
Wireless Glob
al (India)
Private Limit
ed
100.0
0
Equity
share
s
201 - 206, S
hiv Smrit
i Chambers,
49/A, Dr. Annie
Besant Roa
d,
Worli, Mumba
i, Maharas
htra, 400018, In
dia
Omega Tele
com Holdings Pri
vate
Limited
100.0
0
Equity
share
s
Vodafone India Services Private Lt
d
100.
0
0
Equity
share
s
Business@Ma
ntri, Tower B, Wing no – B1 & B2, 3rd Floor, S.
No. – 197, N
ear Hotel
Four Point
s, Lohega
on, Pune,
Mahara
shtra, 411014, In
dia
Vodafone Global Services Privat
e Ltd
100.0
0
Equity
share
s
E-47, Bankra Super Market, Ba
nkra, Howrah, West Bengal,
711403, Ind
ia
Usha Martin Telematics Limited
100.0
0
Equity
share
s
Ireland
2nd Floor,
Palmerston House,
Feni
an Street, D
ublin 2, Ire
land
Vodafone Inte
rnational Finan
cing
Designate
d Activity Comp
any
100.00 Ordinary
shar
es
38/39 Fitzwillia
m Square West, Dubli
n 2, D02 NX53, Ireland
Vodafone Enterp
rise Global Limi
ted
100.00
Ordin
ary shar
es
Vodafone Global Network Limited
100.00
Ordinary sha
res
Mou
ntainview, Leo
pardstown
, Dublin 1
8, Ireland
Vantage Towe
rs Limited
4
81.74
Ordinary
share
s
VF Ireland Property Holdings Limited
100.0
0
Ordinary
euro
shares
Vodafon
e Group Servic
es Ireland
Limited
100.0
0
Ordinar
y
sh
ares
Vodafone Ireland Limited
100.0
0
Ordinar
y
sh
ares
Vodafone Ireland Marketing Limited
100.
0
0
Ordinar
y
sh
ares
Vodafone Ireland Retail Limited
100.0
0
Ordinar
y
share
s
Italy
Piazza
le Luigi Ca
dorna, 4, 20123, M
ilano, Italy
Vodafone Glob
al Enterprise (Ita
ly)
S.R.L.
100.0
0
Ordinar
y
sh
ares
SS 33 de
l Sempione KM 3
5, 212, 2
1052 Busto A
rsizio (V
A), Italy
Vodafone Automotive Italia S.p.A
100.0
0
Ordinar
y
sh
ares
Via As
tico 41, 2110
0 Varese, Ita
ly
Vodafone Automo
tive Electroni
c
Systems S.r.L
100.0
0
Ordinar
y
sh
ares
Vodafone Automotive SpA
100.0
0
Ordinar
y
sh
ares
Vodafone Automotive Telematics Srl
100.0
0
Ordinar
y
share
s
Via Jerv
is 13, 10015,
Ivrea, Tourin
, Italy
VEI S.r.l.
100.0
0
Partnership
interes
t
shares
Vodafone Italia S.p.A.
100.0
0
Ordinar
y
sh
ares
Via Loren
teggio 240, 2
0147, Milan,
Italy
Vodafone Enterpris
e Italy S.r.L
100.0
0
Euro shares
Vodafone Gestioni S.p.A.
100.0
0
Ordinar
y shares
Vodafone Servizi E Tecnologie S.R.L.
100.0
0
Equity s
hares
Via per C
arpi 26/B, 42015,
Corregg
io (RE), Italy
VND S.p.A
100.0
0
Ordinar
y shares
Japan
KAKiYa
building, 9F, 2-7-17 S
hin-Yokohama, Kohoku-k
u,
Yokoha
- City, Ka
nagawa, 222-003
3, Japan
Vodafone Automotive Japan KK
100.0
0
Ordinar
y shares
Marunouchi Trust Tower North 15F, 8-1, Maruno
uchi 1-chome,
Level 15, Chiyoda-ku, T
okyo, Japan
Vodafone Enterp
rise U.K. –
Japan
ese Branch
2
100.0
0
Branch
Vodafone Glob
al Enterprise
(Japan)
K.K.
100.0
0
Ordinar
y shares
Jersey
44 Esplana
de, St Helier, JE
4 9WG, Jers
ey
Aztec Limited
100.0
0
Ordinar
y shares
Globe Limited
100.0
0
Ordinar
y shares
Plex Limited
100.0
0
Ordinar
y shares
Vizzavi Fi
nance Limited
99.9
9
Ordinar
y shares
Vodafone International 2 Limited
100.0
0
Ordinar
y shares
Vodafone Jers
ey Dollar Holdings
Limited
100.0
0
Limited liabilit
y
shares
Vodafone Jersey Finance
100.0
0
Ordinar
y shares
Vodafone Jerse
y Yen Holdings
Unlimited
100.0
0
Limited liabilit
y
shares
Kenya
6th Floor, ABC T
owers, ABC Plac
e, Waiyaki Way, Nairobi,
00100, K
enya
M-PESA Holding Co. Limited
100.0
0
Equity s
hares
Vodafone Ke
nya Limited
5
65.43
Ordinary
voting
shares
The Rive
rfront, 4th
floor, Prof
. David Wasawo Dr
ive, Off Rivers
ide
Drive, Nairob
i, Kenya
Vodacom Busi
ness (Kenya) L
imited
5
48.4
0
Ordinar
y shares,
Ordinar
y B shares
Korea
, Republic
of
ASEM Tower L
evel 37, 51
7 Yeongdong
-daero, Gang
nam-gu,
Seoul, 135-79
8, Korea, Republic of
Vodafone Enterpris
e Korea Limited
100.0
0
Ordinar
y shares
Lesoth
o
585 Mabile Road
, Vodacom Park, Mas
eru, Lesotho
Vodacom Lesotho (Pty) Limited
5
48.40
Ordinary shares
Luxembourg
15 rue Edwa
rd Steichen, L
uxembourg, 254
0, Luxembourg
Tomorrow Street GP S.à r.l.
100.0
0
Ordinar
y shares
Vodafone As
set Management
Services
S.à r.l.
100.0
0
Ordinar
y shares
Vodafone Enterp
rise Global
Business
es S.à r.l.
100.0
0
Ordinar
y shares
Vodafone Enterpris
e Luxembourg S.A.
100.0
0
Ordinary e
uro
share
s
Vodafone International 1 S.à r.l.
100.0
0
Ordinar
y shares
Vodafone International M S.à r.l.
100.0
0
Ordinar
y shares
Vodafone Investme
nts Luxembourg
S.à r.l.
100.0
0
Ordinar
y shares
Vodafone Luxembourg 5 S.à r.l.
100.
0
0
Ordinar
y shares
Vodafone Luxembourg S.à r.l.
100.0
0
Ordinar
y shares
Vodafon
e Procurement
Company S.à
r.l.
100.0
0
Ordinar
y shares
Vodafone Roaming Services S.à r.l.
100.
0
0
Ordinar
y shares
Vodafone Services Company S.à r.l.
100.0
0
Ordinar
y shares
Malaysi
a
Suite 13.0
3, 13th Floo
r, Menara Tan &
Tan,
207 Jalan
Tun Raza
k, 50400 Kua
la Lumpur,
Malaysia
Vodafone Glob
al Enterpris
e (Malaysia)
Sdn Bhd
100.0
0
Ordinar
y shares
Malta
Portoma
so Business
Tower, Level 15B, S
t Julians
, STJ 4011,
Malta
Vodafone Holdings Limited
100.0
0
‘A’ Ordinary shares
,
‘B’ Ordinary share
s
Vodafone Insurance Limited
100.0
0
‘A’ Ordinary shares
,
‘B’ Ordinary shares
Maur
itius
10th Floor, Sta
ndard Chartered Towers
, 19 Cybercity, Ebene,
Mauritius
Mobile Wallet V
M1
5
60.5
0
Ordinar
y shares
Mobile Wallet V
M2
5
60.5
0
Ordinar
y shares
VBA (Mauriti
us) Limited
5
60.5
0
Ordinar
y shares,
Redeemabl
e
preferenc
e shares
Vodacom Inte
rnational Li
mited
5
60.5
0
Ordinar
y shares,
Non-cumula
tive
preferenc
e shares
Fifth Floor, Ebene Esplan
ade, 24 Bank Street
, Cybercity, Ebene,
Mauritius
Al-Amin Investments Limit
ed
100.0
0
Ordinar
y shares
Array Holdings Li
mited
100.0
0
Ordinar
y shares
Asian Tele
communication
Investme
nts (Mauritius) Li
mited
100.0
0
Ordinar
y shares
CCII (Mauriti
us), Inc.
100.0
0
Ordinar
y shares
CGP India Investment
s Ltd.
100.0
0
Ordinar
y shares
Euro Pacific Securities Lt
d.
100.0
0
Ordinar
y shares
Mobilvest 100.0
0
Ordinar
y shares
Prime Metals Ltd.
100.0
0
Ordinar
y shares
Trans Crysta
l Ltd.
100.0
0
Ordinar
y shares
Vodafone Mauri
tius Ltd.
100.0
0
Ordinar
y shares
Vodafone Te
le-Services (Ind
ia)
Holdings L
imited
100.0
0
Ordinar
y shares
Vodafone Tele
communications
(India) Limi
ted
100.0
0
Ordinar
y shares
Strategic report
Governance
Financials
Other information
207
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
31. R
elate
d undert
aking
s (cont
inued
)
Mexico
Avenida
Insurgent
es Sur No. 1647, Pis
o 12, desp
acho 1202,
Coloni
a San José Insurge
ntes, Alc
aldía Ben
ito Juárez, C.
P.
03900, Ciu
dad de México
, Mexico
Vodafone Emp
resa México S.de R.L
.
de C.V.
100.0
0
Corporate certifi
cat
e
series
A shares
,
Corporate ce
rtificat
e
series B sha
res
Mozambique
Rua dos
Desportist
as, Numero 649, Cid
ade de Mapu
to,
Mozambique
Vodacom Moçamb
ique, SA
5
51.42
Ordinary
share
s
Vodafone M-Pesa
, S.A
5
51.42
Ordinary
share
s
Netherlan
ds
Rivium Qua
drant 173, 1
5th Floor, 2909
LC, Ca
pelle aan den
IJssel,
Netherlands
Vodafone Enterprise
Netherlands B.V.
100.0
0
Ordinar
y
shares
Vodafone Europe B.V.
100.
0
0
Ordinar
y
shares
Vodafone International Holdings B.V.
100.0
0
Ordinar
y
shares
Vodafone Panafo
n Internatio
nal
Holdings B.V.
99.87 Ordinary
shares
Rivium Qua
drant 175, 2
909 LC, Ca
pelle aan den IJs
sel,
Netherl
ands
Central
Tower Holding Compan
y B.V.
4
81.74
Ordinary
share
s
and sp
ecia
l
share
s
Zuid-hollande
n 7, Rode Olifa
nt, Spaces, 2596AL, d
en
Haag,
Netherland
s
IoT.nxt USA BV
5
30.87
Ordinary
shares
IOT.NXT B.V.
5
30.87
Ordinary
shares
IoT.nxt Eur
ope BV
5
30.87 Ordinary
shares
New Ze
aland
74 Taharoto Roa
d, Takapuna,
Auckland, 0622, New Zea
land
Vodafone Ente
rprise Hong Kong
Limited
- New Zealand Branch
2
100.0
0
Branch
Norway
c/o Econ
Partner AS
, Dronning
Mauds gate 15,
Oslo, 0250,
Norway
Vodafone Enterpris
e Norway AS
100.0
0
Ordinar
y
share
s
Vodafone House, The Connect
ion, Newbury, Berkshire, RG14
2FN, United Kingdom
Vodafone Limited
– Norway Branch
2
100.0
0
Branc
h
Oman
Knowle
dge Oasis Muscat
, Al-seeb, M
uscat, Gover
norate P.
O Box
104 135, Oman
Vodafone Services LLC
100.0
0
Share
s
Polan
d
ul. Towarowa
28, 00-8
39, Warsaw, P
oland
Vodafone Business Poland sp. z o.o.
100.0
0
Ordinar
y
shares
Portu
gal
Av. D. Jo
ão II, nº 36
– 8º Piso,
1998 – 017, Pa
rque da
s Nações,
Lisboa, Portugal
Oni Way - Infocomuni
cacoes, S.A
100.0
0
Ordinar
y shares
Vantage Towe
rs, S.A.
4
81.7
4
Ordinar
y share
s
Vodafone Enterp
rise Spain, S
.L.U. -
Portugal Bra
nch
2
100.0
0
Branch
Vodafone P
ortugal - Comunica
coes
Pessoais,
S.A.
100.0
0
Ordinar
y shares
Romania
1 A Consta
ntin Ghercu Street, 10th
Floor, 6
th
District, Buch
arest,
Romania
UPC Services S.R.L. (in
liquidation)
100.0
0
Ordinar
y share
s
201 Barbu
Vacaresc
u, 4th Floor, 2n
d District,
Bucharest
, Romania
Vodafone Romania S.A
100.00
Ordinary shares
201 Barbu
Vacaresc
u, 5th Floor, 2n
d District,
Bucharest
, Romania
Vodafone External Services S.R.L.
100.0
0
Ordinar
y share
s
201 Barbu Va
carescu Street, Mez
zanine, District 2, Bucha
rest,
Romania
Vodafone Foundation
100.00
Sole member
201 Barbu Va
carescu Street, Mez
zanine, Room 1, Distric
t 2,
Bucharest
, Romania
Vantage Towe
rs S.R.L.
4
81.
74
Ordinary shares
62D Nordului Street, Distric
t 1, Bucharest, Romania
UPC Foundation
100.00
Sole member
Oltenitei
Street no. 2, Ci
ty Offices Bui
lding, 3rd Floor,
Bucharest,
4th Dis
trict, Roma
nia
Vodafone România Technologies SRL
100.0
0
Ordinary
shares
Sectorul
2, Strada Bar
bu V
ĉ
c
ĉ
rescu, N
r. 201, Etaj 1
, Buchares
t,
Romania
Vodafone România M - Payments
SRL
100.
00
Ordinary shar
es
c
oseaua Vestului no. 1A, West Mall Ploie
ƕ
ti, First Floor, Ploie
ƕ
ti
,
Romania
Evotracking SRL
100.0
0
Ordinar
y shares
Russia
n Federat
ion
Build. 2,
14/10, Chay
anova st
r., 125047, Mo
scow, Rus
sian
Federation
Cable & Wireless CIS Svyaz LLC
100.0
0
Charter cap
ita
l
shares
Serbia
Vladimira Popov
i
đ
a 38-
40, New Belgrade,
11070, S
erbia
Vodafone Ente
rprise Equip
ment
Limited
Ogranak u Beogradu - Serb
ia
Branch
2
100.0
0
Branch
Singapore
Asia S
quare Tower 2, 12 Marin
a View, #17-
01, 018961,
Singapor
e
Vodafone Enterp
rise Singapore
Pte.Ltd
100.0
0
Ordinar
y shares
Slovakia
Prievoz
ská 6, Bratisla
va, 821 09, Slo
vakia
Vodafone
Czech Republic A.
S. –
Slovakia Branc
h
2
100.0
0
Branch
Suché m
ýto 1, Bratis
lava, 811 03, Slov
akia
Vodafone Global N
etwork Limited
–
Slovakia Branc
h
2
100.0
0
Branch
South Africa
319 Frere Roa
d, Glenwood,
4001, S
outh Africa
Cable and
Wireless Worldwi
de South
Africa (Pty) Ltd
100.0
0
Ordinar
y shares
9 Kinros
s Street, Germis
ton South
, 1401, South A
frica
Vodafone Hold
ings (SA) Proprietary
Limited
100.0
0
Ordinar
y shares
Vodafone Inve
stments (SA)
Proprieta
ry Limited
100.0
0
Ordinary A s
hares,
“B” Ordinary no par
value sh
ares
Bylsbridge O
ffice Park, Building 14m
Block C, 1st F
loor,
Alexandra Road, Centurion, Highve
ld Ex
t 73, 0046, S
outh Afric
a
10T Holdings (Proprieta
ry) Limited
5
30.8
6
Ordinar
y share
s
IoT.nxt (Pty
) Limited
5
30.8
6
Ordinar
y share
s
IOT.nxt De
velopment (Pty
) Limited
5
30.8
6
Ordinar
y share
s
Vodacom Corporate Pa
rk, 0
82 Vodacom Boulev
ard, Midrand,
1685, S
outh Africa
GS Telecom (P
ty) Limited
5
60.5
0
Ordinar
y shares
Infinity Servi
ces Partner Company
5
60.5
0
Ordinar
y share
s
Jupicol
(Proprietary)
Limited
5
42.35
Ordinary
s
hare
s
Mezzanine Ware (
RF) Proprieta
ry
Limited
5
54.45
Ordinary shares
Motifprops
1 (Proprietary) Li
mited
5
60.5
0
Ordinar
y shares
Scarlet Ibis Inv
estments 23 (P
ty)
Limited
5
60.5
0
Ordinar
y shares
Storage Techno
logy Services
(Pty)
Limited
5
30.85
Ordinary share
s
Vodacom (Pty
) Limited
5
60.5
0
Ordinar
y shares,
Ordinary A s
hares
Vodaco
m Business Af
rica Gro
up (Pty)
Limited
5
60.5
0
Ordinar
y shares
Vodacom Financi
al Services
(Proprietary
) Limited
5
60.5
0
Ordinar
y shares
Vodacom Gro
up Limited
60.5
0
Ordinar
y shares
Vodacom Insura
nce Administra
tion
Company (P
roprietary) Limite
d
5
60.5
0
Ordinar
y shares
Vodacom Insura
nce Company (RF)
Limited
5
60.5
0
Ordinar
y shares
Vodacom Intern
ational Hold
ings (Pty)
Limited
5
60.5
0
Ordinar
y shares
Vodacom Life As
surance Company
(RF) Limited
5
60.5
0
Ordinar
y shares
Vodacom Payme
nt Services
(Proprietary
) Limited
5
60.5
0
Ordinar
y shares
Vodacom
Properties No 1
(Proprietary
) Limited
5
60.5
0
Ordinar
y shares
Vodacom Prop
erties No.2 (P
ty)
Limited
5
60.5
0
Ordinar
y shares
Wheatfields
Investments 276
(Proprietary
) Limited
5
60.5
0
Ordinar
y shares
XLink Communi
cations (Propri
etary)
Limited
5
60.5
0
Ordinary A Share
s
Strategic report
Governance
Financials
Other information
208
Vodafone Group Plc
Annual Report 2022
Spain
Antra
cita, 7 – 28045, Ma
drid, Spain
Vodafone Automotive Iberia S.L.
100.00
Ordinary shares
Avenida
de América 115, 28
042, Madrid,
Spain
Vodafone Enabler E
spañ
a,
S.L.
100.00
Ordinary shar
es
Vodafone Energía, S.L.
100.00
Ordinary share
s
Vodafone Enterpris
e Spain SLU
100.00
Ordinary shares,
Ordinary e
uro
shares
Vodafone España S.A.U.
100.
00
Ordina
ry shares
Vodafone Holdings Europe S.L.U.
100.00
Ordinary shar
es
Vodafone ONO, S.A.U.
100.00
Ordinary sha
res
Vodafone Servicios S.L.U.
100.00
Ordina
ry share
s
Calle San S
evero 22, 28042, Madr
id, Spai
n
Vantage Tow
ers, S.L.U.
4
81.74
Ordinary
share
s
Torre Norte Adi
f, Explana
da de la Estación no 7, 2
9002, Málag
a,
Spain
V
odafo
ne Intellige
nt Soluti
ons España,
S.L.U.
100.00
Ordinary shares
Sweden
c/o Hells
tröm advok
atbyrå, Box
7305, 103 90, St
ockholm,
Sweden
Vodafone Enterprise
Sweden AB
100.00
Ordinary shares,
Shareh
older’
s
contr
ibution share
s
Switzerlan
d
Schif
fbaustrass
e 2, 8005, Zuric
h, Switz
erland
Vodafone Enterpris
e Switzerland AG
100.00
Ordinary shares
Taiwan
22F., No.1
00, Songren
Road., Xiny
i Distric
t, Taipei C
ity, 11070,
Taiwan
Vodafone Glob
al Enterprise
Taiwan
Limited
100.00 Ordinary
share
s
Tan
zania, Uni
ted Repub
lic of
15 Floor, Vod
acom Tower, U
rsino Esta
te, Plot N
o. 23,
Bagamoy
o Road, Dar es Sala
am, Tanzania, United
Republic of
M-Pesa Li
mited
5
45.37
Ordinary A shares
,
Ordinar
y B shares
Shared Networks
Tanzania Li
mited
5
45.37
Ordinary shares
Vodacom Ta
nzania Public L
imited
Company
5
45.37
Ordinary shares
3rd Floor, Maktab
a (Library), Co
mplexBibi, Titi Mohaned Road,
Dar es Sa
laam, Tanzania, Unit
ed Republic of
Gateway Commu
nications Ta
nzania
Limited
(in liquidation)
5
59.89 Ordinary
shares
Turkey
Büyükdere C
addesi, No
: 251, Maslak,
b
i
Ɣ
li /
7
sta
nbul, 34398,
Turkey
Vodafone Bilgi Ve Il
etisim Hizmetleri
AS
100.00 Registered
shares
Vodafone Dagi
tim, Servis v
e Icerik
Hizmetleri A.S.
100.00 Ordinary
shares
Vodafone Dijital Yayincilik Hizmetleri
A.S.
100.00 Ordinary
share
s
Vodafone Holding A.S.
100.00
Registered shares
Vodafone Kule v
e Altyapi Hizme
tleri
A.S.
100.00 Ordinary
share
s
Vodafone Mall Ve Electronik
100.00
Ordinary shar
e
s
Hizme
tler Ticaret AS
Vodafone Medya Icerik Hizmetleri A.S.
100.0
0
Ordinar
y shares
Vodafone Net
ċ
leti
ĸ
im Hizmetleri A.S.
100.0
0
Ordinar
y shares
Vodafone Telekomunikasyon A.S.
100.0
0
Register
ed shares
7
T
m
Ayaza
Œ
a Kampüsü, Koru Yolu, Ar
Ŧ
Te
knokent Ar
Ŧ
3 Binas
Ŧ
,
Maslak,
7
stanbul, 5865
53, Turkey
Vodafone Teknoloji Hizmetleri A.S.
100.0
0
Register
ed shares
Maslak
Mah. AOS 55 S
k. 42 Maslak S
it. B Blok Ap
t. No: 4/663,
Sar
Č
yer Istanbul, Turkey
Vodafone Sigort
a Aracilik His
metleri A.S.
100.00
Ordinary shares
Maslak Ma
h. AOS 55. Sok.
42 Maslak B BLOK Si
t. No: 4 / 665,
Sar
Č
yer / Istanbul, Turkey
Vodafone Elektr
onik Para Ve Ö
deme
Hizmetleri A.S.
100.00
Registered shares
Maslak Mah. AOS 55.Soka
k 42 Maslak Sitesi No:4 Kat 18, Ic Kapi
:
664 Sar
Č
yer Istanbul, Tur
key
Vodafone Finansman A.S.
100.00
Ordinary shares
Ukraine
Bohdana Khmelnytskog
o Str. 19-21, Kyiv, Ukraine
LLC Vodafone Ente
rprise Ukraine
100.0
0
Ordinar
y shares
United Ar
ab Emirates
16-SD 129,
Ground Floor,
Building 1
6-Co Work, D
ubai Internet
City, Unit
ed Arab Emirates
Vodacom Finte
ch Services FZ-L
LC
5
60.5
0
Ordinar
y shares
Office 101, 1st Floor, DIC Buildi
ng 1, Dubai Internet City, Duba
i,
United A
rab Emirates
Vodafone Enterp
rise Europe (UK
) Limited
– Dubai Branch
2
100.0
0
Branch
United Ki
ngdom
1-2 Berkeley
Square, 99 Berkeley S
treet, Glasgow, G3
7HR,
Scotland
Thus Group Holdings Limited
100.0
0
Ordinar
y shares
Thus Group Limited
100.0
0
Ordinar
y shares
Thus Profit Sharing Trustees Limited
100.0
0
Ordinar
y shares
11 Staple Inn, Lon
don, WC1V 7QH, United Ki
ngdom
Vodacom Busine
ss Africa Group
Services
Limited
5
60.50
Ordinary sha
res,
Preferenc
e
shares
Vodac
om Inves
tments Comp
any
Proprietary Lim
ited
5
60.50
Ordinary
shares
Vodacom UK Li
mited
5
60.50
Ordinary sh
ares,
Non-redeem
able
ordinary A
shares,
Ordinary
B shares, Non-
redeemabl
e
preferenc
e
shares
784 Upper N
ewtownards Roa
d, Belfas
t, BT16 1UD, Un
ited
Kingdom
Vodafone (NI) L
imited
100.00
Ordinary
shares
Edinburgh House, 4 North St.
Andrew St
reet, Edinburgh, EH2
1HJ, United Kingdom
Pinnacle Cellular Group Limited
100.0
0
Ordinar
y shares
Pinnacle Cellu
lar Limited
100.0
0
Ordinar
y shares
Vodafone (Scotland) Limited
100.0
0
Ordinar
y shares
Quarry Corner, Dundonald, Belfa
st, BT16 1UD,
Northern Ireland
Energis (Ireland) Limited
100.0
0
A Ordinary s
hares, B
Ordinar
y shares, C
Ordinar
y shares, D
Ordinar
y
Vodafone House, The Connec
tion, Newbury, Berkshire, RG14
2FN, United Kingdom
Apollo Submari
ne Cable System
Limited
100.0
0
Ordinar
y shares
Bluefish Communications Limited
100.0
0
Ordinary A s
hares,
Ordinar
y B shares,
Ordinar
y C shares,
Ordinar
y D shares
Cable & Wirele
ss Aspac Hold
ings
Limited
100.0
0
Ordinar
y shares
Cable & Wireless CIS
Services Limited
100.0
0
Ordinar
y shares
Cable & Wire
less Communications
Data Network Ser
vices Limited
100.0
0
‘A’ Ordinary shares
,
‘B’ Ordinary shares
Cable & Wirele
ss Europe Hold
ings
Limited
100.0
0
Ordinar
y shares
Cable & Wi
reless Global
Business
Services Li
mited
100.0
0
Ordinar
y shares
Cable & Wirele
ss Global Holding
Limited
100.0
0
Ordinar
y shares
Cable & Wirele
ss Global
Telecommuni
cation Services
Limited
100.0
0
Ordinar
y shares
Cable & Wireless UK Holdings Limited
100.0
0
Ordinar
y shares
Cable & Wireless Worldwide Limited
100.0
0
Ordinar
y shares,
Redeemabl
e
preferenc
e shares
Cable & Wirele
ss Worldwide
Voice
Messagi
ng Limited
100.0
0
Ordinar
y shares
Cable and Wireless (India) Limit
ed
100.0
0
Ordinar
y shares
Cable and Wireless Nominee Limited
100.0
0
Ordinar
y shares
Central Commu
nications Gro
up
Limited
100.0
0
Ordinar
y shares,
Ordinary A s
hares
Energis Communications Limited
100.0
0
Ordinar
y shares
Energis Squared Limited
100.0
0
Ordinar
y shares
General Mobile
Corporation L
imited
(in process of d
issolution)
100.0
0
Ordinar
y shares
London Hyd
raulic Power Company
(The)
100.0
0
Ordinary
shares, 5%
Non-Cumulative
preferenc
e shares
MetroHoldings Limited
100.0
0
Ordinar
y shares
ML Integration Group Limited
100.0
0
Ordinar
y shares
Navtrak Limited
100.0
0
Ordinar
y shares
Project Telecom H
oldings Limited
1
100.0
0
Ordinar
y shares
Rian Mobile Limited
100.0
0
Ordinar
y shares
Talkland Inte
rnational Li
mited (in
process of d
issolution)
100.0
0
Ordinar
y shares
Talkmobile Limited
100.0
0
Ordinar
y shares
The Ea
stern Leasing
Company
Limited
100.0
0
Ordinar
y shares
Thus Limited
100.0
0
Ordinar
y shares
Vizzavi Limited
100.0
0
Ordinar
y shares
Voda Limited
100.0
0
Ordinary shares
Vodaf
one (New Z
ealand)
Hedging
Limited
100.0
0
Ordinar
y shares
Vodafone 2.
100.0
0
Ordinar
y shares
Vodafone 4 UK
100.0
0
Ordinar
y shares
Vodafone 5 Limited
100.0
0
Ordinar
y shares
Vodafone 5 UK
100.0
0
Ordinar
y shares
Vodafone 6 UK
100.0
0
Ordinar
y shares
Vodafone Americas 4
100.0
0
Ordinar
y shares
Strategic report
Governance
Financials
Other information
209
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
31. R
elate
d undert
aking
s (cont
inued
)
Vodafone Automotive UK Limited
100.0
0
Ordinar
y share
s
Vodafone Benelux Limited
100.0
0
Ordinar
y shares,
Preferenc
e share
s
Vodafone Ce
llular Limited
1
100.0
0
Ordinar
y shares
Vodafone Cons
olidated Hold
ings
Limited
100.0
0
Ordinar
y shares
Vodafone Corporate Limited
100.
0
0
Ordinar
y shares
Vodafone Corp
orate Secretaries
Limited
1
100.0
0
Ordinar
y shares
Vodafone DC
Pension Truste
e
Company Limited
1
100.0
0
Ordinar
y shares
Vodafon
e Distribu
tion Holdings
Limited
100.0
0
Ordinar
y shares
Vodafone Enterp
rise Corporate
Secretaries L
imited
100.0
0
Ordinar
y shares
Vodafone Ente
rprise Equip
ment
Limited
100.0
0
Ordinar
y shares
Vodafone Enterp
rise Europe (UK
)
Limited
100.0
0
Ordinar
y shares
Vodafone Enterprise
U.K.
100.0
0
Ordinar
y share
s
Vodafone Euro Hedging Limited
100.
0
0
Ordinar
y shares
Vodafone Euro Hedging Two
100.0
0
Ordinar
y shares
Vodafone Europe UK
100.0
0
Ordinar
y shares
Vodafone Europ
ean Inves
tments
1
100.0
0
Ordinar
y shares
Vodafone Europ
ean Portal Limite
d
1
100.0
0
Ordinar
y shares
Vodafone Fi
nance Limited
1
100.0
0
Ordinar
y shares
Vodafone Fi
nance Luxembourg
Limited
100.0
0
Ordinar
y shares
Vodafone Finance Sweden
100.0
0
Ordinar
y shares,
Ordina
ry deferred
Vodafone Finance UK Limited
100.
0
0
Ordinar
y shares
Vodafone Financial Operation
s
100.0
0
Ordinar
y shares
Vodafon
e Global Conten
t Services
Limited
100.0
0
Ordinar
y shares, 5
%
fixed rate
non-voting
preferenc
e share
s
Vodafone Global Enterprise Limited
100.0
0
Ordinar
y shares,
Deferr
ed shares,
B
deferred sh
ares
Vodafon
e Group (Director
s) Trustee
Limited
1
100.0
0
Ordinar
y shares
Vodafone Group
Pension Tr
ustee
Limited
1
100.0
0
Ordinar
y shares
Vodafone Group Services Limit
ed
100.0
0
Ordinar
y shares,
Deferr
ed shares
Vodafone Group Services No.2
Limited
1
100.0
0
Ordinar
y shares
Vodafone Group
Share Truste
e
Limited
1
100.0
0
Ordinar
y shares
Vodafone Holdings
Luxembourg
Limited
100.0
0
Ordinar
y shares
Vodafone Interme
diate Enterpris
es
Limited
100.0
0
Ordinar
y shares
Vodafone Interna
tional 2 Limited
–
UK Branch
2
100.0
0
Branch
Vodafone Interna
tional Holdi
ngs
Limited
100.0
0
Ordinar
y shares
Vodafone Interna
tional Ope
rations
Limited
100.0
0
Ordinar
y shares
Vodafone Investment UK
100.0
0
Ordinar
y shares
Vodafone Inve
stments Australi
a
Limited
100.0
0
Ordinar
y shares
Vodafone Inve
stments Limited
1
100.0
0
Ordinar
y shares,
Zero coupon
redeemabl
e
preferenc
e share
s
Vodafone IP L
icensing Limite
d
1
100.0
0
Ordinar
y shares
Vodafone Limited
100.
0
0
Ordinar
y shares
Vodafone Marketing UK
100.0
0
Ordinar
y shares
Vodafone Mob
ile Communications
Limited
100.0
0
Ordinar
y shares
Vodafone Mobile Ente
rprises Limited
100.0
0
A-ordinary sha
res,
Ordinar
y one pound
shares
Vodafone Mobile Network Limited
100.0
0
A-ordinary sha
res,
Ordinar
y one pound
shares
Vodafone Nominees L
imited
1
100.0
0
Ordinar
y shares
Vodafone Oceania Limit
ed
100.0
0
Ordinar
y shares
Vodafone Old
Show Ground Site
Management L
imited
100.0
0
Ordinar
y shares
Vodafone Overseas Financ
e Limited
100.0
0
Ordinar
y shares
Vodafone Overseas Holdings Limit
ed
100.0
0
Ordinar
y shares
Vodafone Panafo
n UK
99.87
Ordinary shares
Vodafone Partner Services Limit
ed
100.0
0
Ordinar
y
shares,
Redeemabl
e
preferenc
e shares
Vodafone Prop
erty Investments
Limited
100.0
0
Ordinar
y
sha
res
Vodafone Retail (Holdings) Limited
100.
0
0
Ordinar
y
sha
res
Vodafone Sales & Services Limited
100.0
0
Ordinar
y
sha
res
Vodafone UK Foundation
100.0
0
Sole
membe
r
Vodafone UK Limited
1
100.0
0
Ordinar
y
sha
res
Vodafone Ve
ntures Limited
1
100.0
0
Ordinar
y
sha
res
Vodafone Worldwi
de Holdings
Limited
100.0
0
Ordinar
y
shares
;
Cumula
tiv
e
preferenc
e
Vodafone Yen Finance Limit
ed
100.
0
0
Ordinar
y
sha
res
Vodafone-Central
Limited
100.0
0
Ordinar
y
sha
res
Vodaphone Limited
100.0
0
Ordinar
y
sha
res
Vodata Limited
100.0
0
Ordinar
y
sha
res
Your Communications Group Limited
100.0
0
B Ordinary shares,
Redeemabl
e
preferenc
e share
s
United S
tates
1209 Ora
nge, Oran
ge Street, Wilmin
gton, New C
astle DE
19801, Unit
ed States
IoT nxt USA Inc
5
30.87
Common stock
145 West 4
5th St., 8t
h Floor, New York
NY 10036,
United Sta
tes
Cable & Wirele
ss Americas Syste
ms,
Inc.
100.0
0
Common
stoc
k
shares
Vodafone Americas Virginia Inc.
100.0
0
Common
stoc
k
shares
Vodafone US Inc.
100.0
0
Common
stoc
k
share
s
1615 Plat
te Street, S
uite 02-115, Denv
er CO 8020
2, United Sta
tes
Vodafone Americas Foundation
100.0
0
Truste
e
2711 Cent
erville Road, S
uite 400, Wi
lmington, De
laware 19808,
United Sta
tes
Unitymedia Finan
ce LLC
100.00
Sole member
Strategic report
Governance
Financials
Other information
210
Vodafone Group Plc
Annual Report 2022
Associa
ted un
dertaking
s and
joint arrangeme
nts
A
ustrali
a
Ground Fl
oor, 55 Clarenc
e Street, Sydney NSW
2000, Australia
FTTB Wholes
ale Pty Lt
d
25.05
Ordinar
y shares
Level 1, 17
7 Pacifi
c Highway
, North Sy
dney NSW 2060,
Austra
lia
3.6 GHz Spectrum Pt
y Ltd
25.05
Ordinary share
s
AAPT Limited
25.05
Ordinary share
s
ACN 088 889 230 Pty Ltd
25.05
Ordinary sha
re
s
ACN 139 798 404 Pty Ltd
25.05
Ordinary sha
re
s
Adam Internet H
oldings Pty Ltd
25.05
Ordinary share
s
Adam Internet Pty L
td
25.05
A shares, B shares,
Ordinar
y share
s
Agile Pty Ltd
25.05
Ordinary shar
e
s
AlchemyIT Pty Ltd
25.05
Ordinary share
s
Blue Call Pty Ltd
25.05
Ordinary sh
are
s
Cable L
icence Hold
ings Pty Ltd
25.05
A share
s, B share
s
Chariot Pty L
td
25.05
Ordinary share
s
Chime Co
mmunications Pty L
td
25.05
Ordinary s
hare
s
Connect Inter
net Solutions Pty
Limited
25.05
Ordinary share
s
Connect West Pty Lt
d
25.05
No 1 Ordina
r
y
share
s
Destra Communi
cations P
ty Ltd
25.05
Ordinary share
s
Digiplus
Contracts Pty
Ltd
25.05
Ordi
nary share
s
Digiplus
Holdings Pty
Ltd
25.05
Ordinary s
hare
s
Digiplu
s Investments Pt
y Ltd
25.05
Ordin
ary share
s
Digiplus
Pty Ltd
25.05
Ordinary share
s
H3GA Prope
rties (No.3) Pty L
imited
25.05
Ordinary shares
Hosteddesk
top.com
Pty Ltd
25.
05
Ordin
ary shar
es
iHug Pty Ltd
25.05
No 1 Ordinar
y
share
s
iiNet (Ozemail) Pt
y Ltd
25.05
Or
dinary shares
iiNet Labs Pty Ltd
25.05
Or
dinary shares
iiNet Limited
25.05
Ordinary sh
ares
Internode Pty Ltd
25.05
B sha
res, Ordinar
y
share
s
IntraPower Pty L
imited
25.05
Ordinary s
hares
Intrapower Te
rrestrial Pty Ltd
25.05
Ordinary shares
IP Group Pty Ltd
25.05
Ordinary shares
IP Services Xchan
ge Pty Ltd
25.05
A shar
es, B share
s
Jiva Pty Ltd
25.05
Ordinary sh
ares
Kooee Communi
cations Pty L
td
25.05
Ordinary s
hares
Kooee Mobile Pty Ltd
25.05
Ordinary shar
es
Kooee Pty Ltd
25.05
A shares, B share
s
Mercury Conne
ct Pty Ltd
2
5.05
E share
s, Ordinar
y
share
s
Mobile JV Pty Limited
25.05
Ordina
ry share
s
Mobileworld C
ommunications Pty
Limited
25.05
Ordina
ry shares
Mobilewo
rld Operating
Pty Ltd
25.
05
Or
dinary shares
Netspace On
line Systems Pt
y Ltd
25.
05
Or
dinary sha
res
Numillar IPS Pty Ltd
25.05
Ordinary shar
es
Orchid Hu
man Resour
ces Pty Ltd
25.
05
Or
dinary shar
es
PIPE Internati
onal (Aust
ralia) Pty Ltd
25.05
Ordinary shares
PIPE Networks
Pty Limited
25.05
Ordinary shares
PIPE Tra
nsmission Pty Lim
ited
25.0
5
Or
dinary shar
es
PowerTel Limited
25.05
Ordinary shares
Request B
roadban
d Pty Ltd
25.05
Or
dinary sh
ares
Soul Communicati
ons Pty Ltd
25.05
Ordinary shares
Soul Contracts Pty Ltd
25.05
Ordinary sha
res
Soul Pattins
on Telecommuni
cations
Pty Ltd
25.05
Ordinary shares
SPT Telecommu
nications Pty L
td
25.05
Ordinary shares
SPTCom Pty Ltd
25.05
Ordinary shares
Telecom Ente
rprises Aus
tralia Pty
Limited
25.05
Ordinary shares
Telecom New Z
ealand Australi
a Pty
Ltd
25.05
Ordinary shares,
Redeemabl
e
preferenc
e shares
TPG Corporation Limited
25.05
Ordinary shares
TPG Energy Pt
y Ltd
25.
05
Ordinary sha
res
TPG Finan
ce Pty Limite
d
25.05
Ordinary s
hares
TPG Holdings Pty Ltd
25.05
Ordina
ry shares
TPG Internet
P
ty Ltd
25.05
Ordinary sha
res
TPG JV Company Pty Lt
d
25.05
Ordina
ry shares
TPG Network Pt
y Ltd
25.05
Ordina
ry shares
TPG Telecom Limited
25.05
Ordinary shares
TransACT B
roadcasting P
ty Ltd
25.05
Ordinary s
hares
Tran
sACT Capital Com
munications
Pty Ltd
25.05
Ordinary shares
TransACT Comm
unications P
ty Ltd
25.05
Ordinary shares
TransACT Vi
ctoria Communi
cations
Pty Ltd
25.05
Ordinary shares
TransACT Vi
ctoria Holdi
ngs Pty Ltd
25.05
Ordinary shares
Transfli
cks Pty Ltd
25.05
Ordinary share
s
Trusted Cloud Pty Ltd
25.
05
Ordinary sh
ares
Trusted Cloud
Solutions Pty Ltd
25.05
Ordinary share
s
Value Added Network Pty Ltd
25.05
Ordinary shares
Virtual Desktop Pty Lt
d
25.
05
Ordinary sha
res
Vodafone Aus
tralia Pty Limi
ted
25.05
Ordinary shares,
Class
B shares,
Redeemabl
e
preferenc
e shares
Vodafo
ne Founda
tion Austr
alia Pty
Limited
25.05
Ordinary shares
Vodafone H
utchison Receivab
les Pty
Limited
25.05
Ordinary shares
Vodafone H
utchison Spectrum P
ty
Limited
25.05
Ordinary shares
Vodafone Ne
twork Pty Limited
25.05
Ordinary share
s
Vodafone Pty
Limited
25.05
Ordinary s
hares
VtalkVoip Pty Lt
d
25.
05
Ordinary sh
ares
Westnet Pty Ltd
25.05
Ordinary shares
Bermuda
Claren
don House,
2 Church St,
Hamilton, HM
11, Bermud
a
PPC 1 Li
mited
25.05
Ordinary shares
Czech Repub
lic
U Rajské z
ahrady 1912/3, Pra
ha 3, 130 00, Cz
ech Republic
COOP Mobil s.r
.o.
33.33
Ordin
ary shares
Egypt
23 Kas
r El Nil St, C
airo, 11211, Eg
ypt
Wataneya Telecommu
nications S.A.E
50.0
0
Ordinar
y shares
Ethiopia
Kirkos Su
b-City, Wore
da 01, Hou
se No. Ne
w, (Safaricom HQ)
,
Addi
s Ababa, Ethio
pia
Safaricom Tele
communicatio
ns
Ethiopia Priv
ate Limited Comp
any
5
18.3
0
Ordinar
y shares
Germ
any
38 Berliner A
llee, 40212, Düss
eldorf, Germany
MNP Deuts
chland Gese
llschaft
bürgerlichen Re
chts
33.33
Partnership
share
Nobels
trasse 55, 180
59, Rost
ock, German
y
Verwaltung “
Urbana Teleuni
on”
Rosto
ck GmbH
3
46.92
Ordinary shares
Greece
43-45 Valtetsiou Str.
, Athens, Greece
Safenet N.P,A.
24.97
Ordinary sha
res
56 Kifisias Avenue & Delfwn, Marous
i, 151 25, Greece
Tilegnous IKE
33.29
Ordinary shares
Maratho
nos Ave 18 km & Py
lou, Pallini, At
tica, 15351,
Greece
Victus Ne
tworks S.A.
49.94
Ordinary s
hares
Ind
ia
10th Floor, Birla C
enturion, Century Mills Compound,
Pandurang Budhkar Ma
rg, Worli, Mumbai, Maharashtra,
400030, Ind
ia
Vodafo
ne Founda
tion
7
46.9
0
Equity s
hares
Vodafon
e Idea Shared Servic
es
Limited
7
47.61
Equity shar
es
Vodafone Ide
a Technology Solutions
Limited
7
47.61
Equity shares
Vodafone m-pes
a Limited
7
47.61
Equity
sha
res
You Broadband India Limited
7
47.61
Equity
shares
A-19, Mohan Co-operative Industrial Estate, Mathura Road,
New Delhi, Delhi,
110044, Ind
ia
FireFly N
etworks Limited
7
23.
81
Equity shares
A4, Aditya Birla
Centre, S.K. Ahire Marg
, Worli, Mumbai,
Mahara
shtra, 400030, In
dia
Aditya Birla
Idea Payments Bank
Limited
(in liquidation)
7
23.33
Equity shar
es
Building No.10, T
ower-A, 4th Floor, DLF Cyb
er City, Gurugram
,
Hary
ana, 122002, India
Indus Towers Limited
21.05
Ordinary shares
Strategic report
Governance
Financials
Other information
211
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
31. R
elate
d undert
aking
s (cont
inued
)
Netherlan
ds
Suman Tower P
lot No. 18, Sect
or No. 11, Ga
ndhinaga
r, 382011,
Gujarat, India
Vodafone Id
ea Limited
47.61
Equity s
hares
Vodafone Idea Manpowe
r Services
Limited
7
47.0
4
Equity s
hare
s
Vodafone House, Corporat
e Road, Prahladnagar, Off S. G.
Highwa
y, Ahmeda
bad, Guja
rat, 380051, India
Connect (Indi
a) Mobile Tech
nologies
Private Limit
ed
7
47.61
Equity share
s
Vodafone Idea Business Services
Limited
7
47.61
Equity share
s
Vodafone Id
ea Communication
Systems Limited
7
47.61
Equity share
s
Vodafone Id
ea Telecom Infrastru
cture
Limited
7
47.61
Equity share
s
Ireland
The Herbert Build
ing, The Park, Carric
kmines, Dublin, Ireland
Siro DAC
50.
00
Ordina
ry shares
Siro JV Holdco Limited
50.0
0
Ordinar
y B share
s
Italy
Via Gaet
ana Neg
ri 1, 20123, Milano,
Italy
Infrastrutt
ure Wireless Italia
ne S.p.A
4
27.12
Ordinary
shar
e
s
Kenya
LR No. 13
263, Safaric
om House, Wa
iyaki Way
, PO Box 66827-
00800, Na
irobi, Keny
a
Safaricom PLC
6
26.13
Ordinary
shares
Safaricom Hous
e, Waiyaki Way Westlands, Nairobi, Kenya
M-PESA Afr
ica Limited
5
43.31
Ordina
ry
shares
Luxembourg
15 rue Edwa
rd Steichen, L
uxembourg, 254
0, Luxembourg
Tomorrow Street SCA
50.0
0
Ordinary A s
hares
,
Ordinar
y B shares
,
Ordinar
y C shares
3 More London Riverside, London, SE1 2AQ, Unit
ed Kingdom
Global Partne
rship for Ethiop
ia B.V.
5
18.30
Ordinar
y shares
Avenue C
eramique 300, 622
1 Kx, Maas
tricht, Netherland
s
Vodafone Libertel
B.V.
50.0
0
Ordinar
y share
s
Boven Vredenburgpas
sage 128, 3511 WR, Utrec
ht,
Netherl
ands
Amsterda
mse Beheer- en
Consultingm
aatschapp
ij B.V.
50.0
0
Ordinar
y share
s
Esprit T
elecom B.V.
50
.0
0
Ordinar
y share
s
FinCo Partne
r 1 B.V.
50.0
0
Ordinar
y share
s
LGE HoldCo V B.V
.
50.0
0
Ordinar
y share
s
LGE HoldCo VI B.V
.
50.0
0
Ordinar
y share
s
LGE Holdco VII B.
V.
50.0
0
Ordinar
y share
s
LGE HoldCo VIII B.V.
50.0
0
Ordinar
y share
s
Vodafone Fi
nancial Services
B.V.
50.0
0
Ordinar
y share
s
Vodaf
one Nederla
nd Holdin
g I B.V.
50.0
0
Ordinar
y share
s
Vodafo
ne Nederla
nd Holding
II B.V.
50
.00
Or
dinary sh
are
s
VodafoneZiggo Emp
loyment B.V.
50.00
Ordinary share
s
VodafoneZiggo Group B.V.
50.00
Ordinary share
s
VodafoneZiggo G
roup Holding B.V.
50.00
Ordinary share
s
VZ Financing I
B.V.
50.00
Ordinary s
hare
s
VZ Financing II
B.V.
50.00
Ordinary share
s
VZ FinCo B.V.
50.00
Ordinary sha
re
s
VZ PropCo B.V.
50.00
Ordinary share
s
VZ Secured
Financing B.V.
50.00
Ordinary share
s
XB Facilities B.V.
50.00
Ordinary share
s
Ziggo B.V.
50.00
Ordinary share
s
Ziggo D
eelnemingen B.V.
50.00
Ordinary sh
are
s
Ziggo Finance 2 B.V.
50.00
Ordina
ry share
s
Ziggo Netwerk II B.V.
50.00
Ordinary sha
re
s
Ziggo Real Es
tate B.V.
50.00
Ordinary share
s
Ziggo Services B.V.
50.00
Ordina
ry share
s
Ziggo Services
Employment B.V.
50.00
Ordinary share
s
Ziggo Services Netwerk
2 B.V.
50.00
Ordinary share
s
Ziggo Zakelijk Services B.V.
50.00
Ordinary share
s
Zoranet Co
nnectivity Services B.V.
50.
00
Ordinar
y share
s
ZUM B.V.
50.00
Ordinary share
s
Media Parkboulevard 2, 1217 WE Hilv
ersum, Netherlands
Libe
rty Global Content Nethe
rlands
B.V.
50.00 Ordinary
share
s
Winschoterdiep 60, 9723 AB Groningen, Netherla
nds
Zesko B.V.
50.00
Ordinary shar
e
s
Ziggo Bond Company B.V.
50.00
Ordinary share
s
Ziggo Netwerk B.
V
.
50.00
Ordinary share
s
New Ze
aland
Tompkins Wake, Level 11, 41 Shortland Street, Auckland 1010,
New Z
ealand
iiNet (New Zeala
nd) AKL Limited
25.05
Ordinary shar
es
Unit 17, 24 Allr
ight Place,
Mt Wellington,
Aucklan
d, New
Zealan
d
TPG (NZ) Pty
Ltd
25.05
Ordinar
y shares
Phil
ippines
22F Robinson Equita
ble Tower, ADB Ave, Corner Povega S
t,
Ortiga
s Center, Pasig City, Philippines
Orchid Cybert
ech Services Inc
25.05
Ordinary sha
res
Portu
gal
Espaç
o Sete Rios,
LEAP Rua de C
ampolide, 351, 0
.05 , 1070-
034,
Lisboa, Portugal
Dualgrid
– Gestão de Re
des
Partilhada
s, S.A.
50.00
Ordinary shares
Rua Pedr
o e Inês, Lote
2.08.01, 19
90-075,
Parque das Nações, Lisboa, Portugal
Sport TV Portugal, S.A.
25.00
Nominative share
s
Romania
Floor 3, Module 2, C
onnected Buildings II
I, Nr. 10A,
Dimitrie Pompei Boulev
ard, Bucharest, S
ector 2, Romania
Netgrid Telecom SRL
50.0
0
Ordinar
y shares
Russia
n Federati
on
Building 3, 11, P
romyshlennaya
Street, Moscow 115 516
Autoconnex L
imited
35.0
0
Ordinar
y shares
South Africa
76 Maude St
reet, Sandt
on, Johannes
berg, 2196, Sou
th Africa
Waterberg L
odge (Proprie
tary)
Limited
5
30.25
Ordinary shares
Build
ing 13, Groun
d Floor, East T
hornhill Office P
ark, 94 Bekker
Road, Vorna
Valley, X67 16
85, South Afric
a
Number Portability Compa
ny (Pty)
Ltd
5
12.1
0
Ordinar
y shares
Rigel Park, Block A, 4
46 Rigel Avenue, Erasmusrand, Preto
ria,
0181, South Afr
ica
Canard Spatial
Technologies (Pty
) Ltd
5
19.66
Ordinary shar
es
AfriGis (Pty
) Ltd
5
16.13
Ordinary shares
Vodacom Corporate Pa
rk, 0
82 Vodacom Boulev
ard, Midrand,
1685, S
outh Africa
M-Pesa S.
A (Proprietar
y) Limited
5
43.31
Ordinary
shares
Tan
zania, Uni
ted Repub
lic of
Plot N
o. 23, Ursino Es
tate, Bag
amoyo Road, D
ar es Salaam
,
Tanzania, United Republic of
Vodacom Tr
ust Limited
(in
liquidation)
5
45.37
Ordinary A shares,
Ordinar
y B shares
Turkey
Çifte H
avuzlar Mah E
ski Londra Asfa
lt
Č
Ca
d No: 151/1E/301,
Esenler, Istanbul, Turk
ey
FGS Bi
lgi Islem Urunler San
ayi ve
Ticaret AS
50.00 Ordinary
shares
United Ki
ngdom
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG,
United Kingdom
Digital Mob
ile Spectrum Limite
d
25.0
0
Ordinar
y shares
3 More Lond
on Riversi
de, London, SE1 2AQ,
United Ki
ngdom
VodaFamily Ethi
opia Holding
Company Limited
5
29.57
Ordinary shares
Griffin House, 161 Hammersmith Road, London, W6 8BS,
United Kingdom
Cable & Wire
less Trade Mark
Management L
imited
50.0
0
Ordinary A s
hares,
Ordinar
y B shares
Hive 2, 15
30 Arlington
Business P
ark, Theale, Readin
g,
Berkshire, R
G7 4SA, United Kingdom
Cornerstone
Telecommunic
ations
Infrastruct
ure Limited
4
40.87
Ordinary shares
Vodafone House, T
he Connection, Newbury, Ber
kshire, RG14
2FN, United King
dom
Vodafone H
utchison (Austr
alia) Holdings
Limited
50.00
Ordinary sha
res
Strategic report
Governance
Financials
Other information
212
Vodafone Group Plc
Annual Report 2022
United S
tates
251 Little Fa
lls Drive, Wilm
ington DE 19808,
United Sta
tes
LG Financin
g Partners
hip
50
.0
0
Partnership
interes
t
PPC 1 (US) Inc.
25.05
Ordinary sha
re
s
Ziggo Finan
cing Partnership
50.0
0
Partnership
interes
t
Notes:
1
Dir
e
ctly held by Vodafone Gro
up Plc.
2 Bran
ches.
3
Sharehold
ing is ind
irect t
hrough V
odafone
Deutschl
and GmbH
.
4
Sharehold
ing is ind
irect t
hrough Va
ntage To
wers A.G
.
5
Shareholding is indirect through Vodacom G
roup Limited. The
indirect shareholding is calc
ulated using the 60.50% ownership
interest in Vodacom Group Limited.
6
At 31 March 2022 the fair value of Safaricom Plc was KES 1,370
billion (€10,693 million) b
ased on the closing quoted share price
on the Na
irobi Stock Ex
change
.
7
Includes t
he indirect
interest
held thro
ugh Vod
afone Ide
a
Limited.
Se
lected
finan
cial
info
rmat
ion
The table below
shows selected financi
al information in resp
ect of subsidiaries tha
t have non-controlling interests tha
t are ma
terial to the Group
1
.
Vodacom Group Limited
Vodafone Egypt
Telecommunications S.A.E
Vantage Towers
A.G.
2022
2021
2022
2021
2022
€m
€m
€m
€m
€m
Summary comprehensiv
e income information
Revenue
5,993
5,181
1,814
1,537
1,252
Profit for the financial year
1,002
891
314
271
345
Other comprehensive expense
(2)
(17)
–
–
–
Total comprehensive income
1,000
874
314
271
345
Other financial information
Profit for the financial year al
located to non
-controlling interests
353
310
141
122
66
Dividends paid to non-controlling
interests
294
307
194
84
52
Summary financial po
sitio
n information
Non-current assets
7,253
6,592
1,630
1,765
11,137
Current assets
3,123
2,671
440
640
704
Total a
ssets
10,376
9,263
2,070
2,405
11,841
Non-current liabilities
(2,191)
(2,617)
(83)
(198)
(5,251)
Current liabilities
(3,539)
(2,406)
(1,197)
(1,
217)
(1,055)
Total assets l
ess total liabilities
4,646
4,240
790
990
5,535
Equity shareholders’ funds
3,624
3,332
474
587
4,522
Non-controlling interests
1,02
2
908
316
403
1,013
Total equity
4,646
4,240
790
990
5,535
Statement of cash flows
Net cash inflow from operating activities
1,946
1,711
755
523
1,110
Net cash outflow from investing activities
(666)
(424)
(284)
(418)
(232)
Net cash outflow from financing ac
tivities
(1,177)
(1,2
51)
(749)
(7)
(861)
Net cash inflow/(outfl
ow)
103
36
(278)
98
17
Cash and cash equival
ents brought forward
876
826
348
273
48
Exchange gain/(loss)
on cash and cash equivalents
46
14
2
(23)
–
Cash and cash
equivalents
1,025
876
72
348
65
Note:
1
Vantage Towers A.G. was listed
on the Frankfurt Stock exchange
on 18 March 2021, resulting in
the recognition of non-contr
ollin
g interests of €1,019 milli
on in year
ending 31 March 2021 in the Group’s
consolidated
Statement of financial position. Non-c
urrent asse
ts, current assets, non-current
liab
ilities and current liab
iliti
es for Vantage Towers A.G. were €10,899 million, €490 million, €4,976 million and
€958 million respectively, in the year end
i
ng 31 March 2021 in the Group’s consolid
ated Sta
tement of financial position.
Strategic report
Governance
Financials
Other information
213
Vodafone Group Plc
Annual Report 2022
Notes to the consolidated financial statements (continued)
32.
Subsid
iaries
exem
pt from
audit
The followi
ng U
K su
bsidiaries will take advantage o
f
the audit exemption set o
ut wit
hin
s
ection 479A of the
Companies Act 2006 f
or the year ended 31 March 2022.
Name Registration
number
Name Registration
number
Bluefish Communications Limited
5142610
Vodafone Enterprise Europe (UK) Limited
3137479
Cable & Wireless Aspac Holdings Limited
4705342
Vodafone Euro Hedging Limited
3954
207
Cable & Wireless CIS Services Limited
2964774
Vodafone Euro Hedging Two
4055
111
Cable & Wireless Europe Holdings Limited
4659719
Vodafone Europe UK
5798451
Cable & Wireless Global
Business Services Limited
3537591
Vodafone European Investments
3961908
Cable & Wireless Global Holding Limited
3740694
Vodafone European Portal Limited
3973442
Cable & Wireless UK Holdings Limited
3840888
Vodafone Finance Lu
xembourg Limited
5754479
Cable & Wireless Worldwide Limited
7029206
Vodafone Finance Sweden
2139168
Cable & Wireless Worldwide Voice Messa
ging
1981417
Vodafone Finance UK Limited
3922620
Limited
Vodafone Financ
ial Operations
4016558
Cable & Wireless Nominee Limited
3249884
Vodafone Global Co
ntent Services Limited
4064873
Energis (Ireland) Limited
NI035793
Vodafone Holdings Luxembourg L
imited
4200970
Energis Communications Limited
2630471
Vodafone Intermediate Enterprises Limited
3869137
Energis Squared Limited
3037442
Vodafone International Holdings Limited
2797426
General Mobile Corporation Limited
2585763
Vodafone International Operations
Limited
2797438
London Hydraulic Power Company (The)
ZC000055
Vodafone Investment UK
5798
385
MetroHoldings Limited
3511122
Vodafone Investments Limited
1530514
ML Integration Group Limited
3252903
Vodafone IP Licensing Limited
6846238
Talkland International Limited
2354106
Vodafone Marketing UK
6858585
The Eastern Leasing Company Limited
1672832
Vodafone Mobile Communications Limited
3942221
Thus Group Holdings Limited
SC192666
Vodafone Mobile Enterprises Limited
3961390
Thus Group Limited
SC226738
Vodafone Mobile Network Limited
3961482
Voda Limited
1847509
Vodafone Nominees Limited
1172051
Vodafone 2.
4083193
Vodafone Oceania Limited
3973427
Vodafone 4 UK
6357658
Vodafone Overseas Finance Limited
4171115
Vodafone 5 Limited
6688
527
Vodafone Overseas Holdings Limited
2809758
Vodafone 5 UK
2960479
Vodafone Panafon UK
6326918
Vodafone 6 UK
8809444
Vodafone Property
Investments Li
mited
3903420
Vodafone Americas 4
6389457
Vodafone UK Limited
2227940
Vodafone Benelux Limited
4200960
Vodafone Worldwide Holdings Limited
3294074
Vodafone Cellular Limited
896318
Vodafone Yen Finance Limited
4373166
Vodafone Consolidated Holdings Limited
5754561
Vodaphone Limited
2373469
Vodafone Corporate Secretaries Limited
2357692
Vodata Limited
2502373
Vodafone Enterprise
Corporate Secretaries Limited
2303594
Your Communications Group Limited
4171876
Vodafone Enter
p
rise E
q
ui
p
ment Limited
1648524
Strategic report
Governance
Financials
Other information
214
Vodafone Group Plc
Annual Report 2022
Company statement
of financial position
of V
odafone Group Plc
at 31 M
arch
2022
2021
Note
€m
€m
Fixed assets
Shares in Group undertakings
2
83,406
83,385
Current
assets
Debtors: amounts falling due
after more than one
year
3
4,288
3,128
Debtors: amounts falling due within one
year
3
172,684
164,14
9
Other investments
4
698
3,107
Cash at bank and in hand
362
586
178,032
170,970
Creditors: amounts falling due within one year
5
(168,913)
(162,761)
Net curren
t assets
9,119
8,209
Total a
ssets less curr
ent liab
ilities
92,5
25
91,594
Creditors: amounts falling due
after more than one
year
5
(45,818)
(47,122)
46,707
44,472
Capital and reserves
Called up share capital
6
4,797
4,797
Share premium account
20,384
20,383
Capital redemption reserve
111
111
Other reserves
1,088
2,970
Own shares held
(7,413)
(6,307)
Profit and loss account
1
27,740
22,518
Total equity shareholders’ funds
46,707
44,472
Note:
1
The profit for the financial year dea
lt with in the financial state
ments of the Company is €5,995 million (2021: €3,863 million).
The Compan
y financial
statements on
pages 215 to 222
were approved
by the Board o
f Directors
and authorised f
or issue on
17 May 2022 an
d
were signed on its behalf by:
Nick
Rea
d
Marg
herita
D
ella
Va
lle
Chief Exe
cutive
Chief Fin
ancial Off
icer
The accomp
anying notes are
an integral part
of these fin
ancial statement
s.
Strategic report
Governance
Financials
Other information
215
Vodafone Group Plc
Annual Report 2022
Company statement
of changes in
equity of Vodafone Group
Plc
For the years ended 31
March
Called up share
capital
Share pr
emium
account
1
Capital
redemption
reserve
1
Other
reserves
1
Reserve for
own shares
2
Profit and loss
account
3
Total equity
shareholders’
funds
€m €m €m €m €m €m €m
1 April 2020
4,797
20,382
111
4,865
(7
,937)
24,844
47,062
Issue or re-issue of shares
4
–
1
–
(1,
944)
2,033
–
90
Profit for the financial year
–
–
–
–
–
3,863
3,863
Dividends
–
–
–
–
–
(2,412)
(2,
412)
Capital contribution given relatin
g to share-based payments
5
–
–
–
136
–
–
136
Contribution received relating
to share-based payments
–
–
–
(87)
–
–
(87)
Repurchase of treasury shares
6
–
–
–
–
(403)
–
(403)
Other movements
7
–
–
–
–
–
(3,7
77)
(3,7
77)
31 March 2021
4,797
20,383
111
2,970
(6,307)
22,518
44,472
Issue or re-issue of shares
4
–
1
–
(1,
903)
2,000
–
98
Profit for the financial year
–
–
–
–
–
5,995
5,995
Dividends
–
–
–
–
–
(2,483)
(2,
483)
Capital contribution given relatin
g to share-based payments
5
–
–
–
119
–
–
119
Contribution received relating
to share-based payments
–
–
–
(98)
–
–
(98)
Repurchase of treasury shares
6
–
–
–
–
(3,106)
–
(3,106)
Other movements
7
–
–
–
–
–
1,710
1,710
31 March 2022
4,797
20,384
111
1,088
(7,413)
27,740
46,707
Notes:
1 These reserves are not distributa
ble.
2 Own shares relate to trea
sury shares which are purchased
out of distributable p
rofits and
therefore reduce reserves avail
able for distrib
ution.
3 The Company has determined
what amounts within this rese
rve are distributa
ble and non-distributab
le in accordance with th
e guidance provided by ICAEW TECH 02/17BL and the requirements of UK
law. In accordance with UK
Companies Act 2006 s831(2), a public
company may make a distribution o
nly if, after gi
ving effect to
such d
istribution, the am
ount of
its net assets is not less than the
aggregate of its’ ca
lled up share ca
p
ital and non-distributable reserves.
4 Movements include the re-issue
of
1,427 million shares (€1,944 million) in March 2021 to satisfy t
he first tranche and in
cludes the re-issue
of 1,519 million shar
es (€1,903 million) in March 2022 to sa
tisfy
the second tranche
of the Mandatory Convertible Bond issued in Marc
h 2019.
5
Includes €nil tax credit (2021: €1 million).
6 Represents the irrevocable
and no
n-discretionary share buyback prog
rammes announced on 19 May 2021, 23 July 2021, 17 Nove
mber 2021 and 9 M
arch 2022 (2021: Announced
on 19 March 2021).
7 Includes the impac
t of the Compan
y’s cash flow hedges with €3,632 million ne
t gain d
eferred to othe
r comprehensive income
during the year (2021: €5,892 million net loss), €1,419 million net gain
(2021: €1,226 million net loss) recycled to
the income statement, and a tax charge of €501 million (2021: credit of €886 millio
n). These hedges primarily relate
to foreign ex
change exposure on
fixed
borrowings, with any foreign exchange on
nominal bala
nces direct
ly impacting income statement in
each p
eriod but interest cash
flows unwinding to the
income statement
over the life of the hedges (up
to 2059). See note 22 ‘Capital and financial risk management’ to
the consolidated financia
l statements for further details.
Strategic report
Governance
Financials
Other information
216
Vodafone Group Plc
Annual Report 2022
1. Basi
s of p
repara
tion
The separ
ate finan
cial stat
ements of th
e Company ar
e drawn up in
accordan
ce with th
e Companie
s Act 2006 an
d Financi
al Reportin
g
Standar
d 101 ‘Reduced d
isclosure frame
work’, (‘FRS 10
1’). The Com
p
any will co
ntinue to pr
epare it
s financi
al statements
in acco
rd
ance with
FRS 101 on
an ongo
ing basis un
til such ti
me as it n
otifies sh
areholder
s of any
change to it
s chosen a
ccountin
g framewo
rk.
The
Comp
any fin
anci
al sta
temen
ts have
been
prepar
ed us
ing the
hist
orica
l cost
con
vention
, as
modif
ied by
the re
valu
ation o
f cer
tain financial asse
ts
and fi
nancial
liabilities
and in
accordance
with
the UK
Companie
s Act 200
6. The f
inancia
l statemen
ts hav
e been
prepared
on a go
ing c
oncern
basis.
The following exemptions available under FRS 101 have been applied:

Pa
ragraphs 45(b)
and 46 to 52 of IFRS
2, ‘Shared-ba
sed payme
nt’ (details of the
number and w
eighted-average
exercise p
rices of
sh
are
options, and how the fair value of goods or services received was determined);

IFRS 7 ‘Financial Instru
ments: Disclosures’
;

Pa
ragraph 91 t
o 99 of IFRS 13, ‘F
air value
measuremen
t’ (disclos
ure of valuation techniques and inputs used for fair value meas
urement of
assets and lia
bilities);

Paragraph 38 of IAS 1 ‘Present
ation of financial statem
ents’
compar
ative inf
ormation r
equiremen
ts in res
pect of par
agraph 7
9(a)(iv) of
IAS 1;

The following paragraphs
of IAS 1 ‘Present
ati
on of f
inancial statements’:

10
(d) (
statem
ent of cash flows);

16 (stateme
nt of com
pliance w
ith all I
FRS);

38A (requirement for minimum of t
wo p
r
imary st
atements, inclu
ding cash flow st
atements);

38B-D (addit
ional com
parative inf
ormati
on);

40A-D (requirements for a th
ird statement of financ
ial position);

111 (cash
flow state
ment inform
ation); an
d

134
-136 (cap
ital man
agement
disclosure
s).

IAS 7 ‘Statement of cash flows’;

Paragra
ph 30 and
31 of IAS 8 ‘
Accountin
g polici
es, chan
ges in ac
counting es
timates an
d errors’ (r
equireme
nt for the d
isclosure
of
informa
tion when an
entity has
not appl
ied a new I
FRS
that h
as been issued
but is not yet effect
ive);

The require
ments in IAS 24 ‘Rel
ated party di
sclosures’
to disclose related
party transaction
s entered into
between two or mo
re
me
mbers
of a group
;

The requirements
in IAS 36 ‘Impairment of a
sset’ to disclose
val
uation technique and as
sumptions used in
determining reco
verabl
e amount
.
As permitted
by section 408(
3) of the Companies A
ct 2006, the in
come statement of the Comp
any is not presented in th
is Annual R
epo
rt.
These
separate financial statements are not intended to give a true
and fair view
of the prof
it or loss or ca
sh flows of the Company
. The
Company ha
s not publishe
d its indi
vidual cash f
low statement
as
its liquidity
, solvency and fin
ancial ada
ptability are depen
den
t on the Group
rather than its o
wn cash flows
.
Critical acc
ounting judgements and key sources of e
stimation uncerta
i
nty
The prep
aration of Co
mpany f
inancial s
tatements in
conform
ity wi
th FRS 101 requi
res management to make estima
tes and assumption
s that
affect the re
ported amo
unts of as
sets and li
abilities
and disclo
su
re of co
ntingent assets
and liabilitie
s at the date of t
he Co
mpany financial
statements an
d
the repor
ted amounts of
revenue and expens
es duri
ng the reportin
g period. Actu
al results could differ from
those
est
imate
s.
The estim
ates and unde
rlying
assumpt
ions are re
viewed o
n an ongo
ing basis
. Revision
s to accoun
ting est
imates ar
e recogn
ised in
th
e period in
which the esti
mate is revis
ed if the revisio
n
affects only that period or
in the peri
od of the revis
ion and future periods if t
he rev
ision affects both
current an
d future periods. Mana
gement regularly reviews the
acco
unting jud
gements that si
gnificantly im
pact the amounts re
cogn
ised in the
financial st
atements and the e
stimates that a
re considered to
be ‘crit
ical estimate
s’ due to their
potential to
give rise to mat
erial adju
stments in
the Company’
s financial statemen
ts in the year en
ding 31 M
arch 2022.
A source of e
stimation uncert
ainty for the Co
mpany relates to
the review for im
pairment of in
vestment car
rying values a
nd the e
stim
ates used
when deter
mining th
e recover
able val
ue of the in
vestment
. However
,
there is no
t considered to
be a signif
icant risk of
material
adju
stment fro
m
revision
s to these assumpt
ions wit
hin the next finan
cial year (se
e note 2 ‘Fixed a
ssets’).
Signifi
cant accounting
policies applied in the cu
rrent reporting peri
od that relate to the financi
al statements as a whole
Foreign currencies
Transactions in foreign currencies are initially recorded at the functional rate of currency prevailing on the
date
of the tr
an
saction. Monetary
assets and l
iabiliti
es denominate
d in foreign curr
encies are r
etr
anslated into th
e Company’s functional cu
rrency at the rates p
r
evailing on
the
report
ing perio
d date. N
on-mone
tary items c
arried at fa
ir value
that are den
ominate
d in forei
gn curren
cies are r
etran
slated at
the rates
prevailin
g on the initial
transactio
n dates. Non-mon
etary items me
asured in te
rms of histor
ical
cost in a foreign curr
ency are
not retranslated
.
Exchan
ge differen
ces arisin
g on the settl
ement of monet
ary
items,
and on the retr
anslation of mon
etary items, are
included in th
e income
statement fo
r the perio
d. Exch
ange diff
erences ar
ising on th
e retransl
ation o
f non-monetary
items carr
ied at f
air value ar
e inc
luded in
the
income st
atement for the per
iod.
Borrowing costs
All borrow
ing costs ar
e recogn
ised in the inco
me st
atement in the
period in wh
ich they are incurre
d.
Notes to the Company financial statements
Strategic report
Governance
Financials
Other information
217
Vodafone Group Plc
Annual Report 2022
Notes to the Company financial statements (continued)
1. Basis of pr
eparation (continued)
Taxation
Current t
ax, includ
ing UK co
rporat
ion tax and fo
reign tax
, is pro
vided at amo
unts expe
cted to be
paid (or re
covered) u
sing the
tax rates an
d laws
that have
been enacted or subs
tantively en
acted by the reporting
period date.
Deferred tax is provided in full on temporar
y differ
ences that ex
ist at the r
eportin
g period da
te and that re
sult in an
oblig
at
ion to pay more tax,
or
a right to pay less t
ax in the future.
The deferred tax is measu
red
at the rate expe
cted to apply in the per
iods in which the t
empo
rary
dif
feren
ces
are expec
ted to reve
rse, based o
n the tax r
ates and la
ws that are en
acted o
r substant
ively ena
cted at the r
eporting
period date
. Tempor
ary
differen
ces arise fro
m the inclu
sion of items of
income and ex
pe
nditure in taxation computations in periods different from thos
e in
which they
are inclu
ded in the Comp
any financial
statement
s. Deferred tax
assets
a
re recognised to the extent that i
t is regarded as more
li
ke
ly th
an n
ot
that they wil
l be reco
vered. Defer
red tax
assets and l
iabiliti
es are not
discounte
d.
Financial instruments
Financial a
ssets and f
inancial li
abilities,
in respect o
f financ
ial in
struments,
are recogni
sed on the Comp
any statement of f
in
ancial po
sition
when
the Company
becomes a party to t
he contractual provis
ions of
the inst
rument.
Financial liabilities
an
d equity instruments
Financial l
iabilit
ies and equ
ity instruments
issued by the
Compan
y
are clas
sified ac
cordin
g to the subst
ance of the con
tractual
arr
angements
entered into and the def
initions of a finan
cial liability an
d an eq
uity instrument. A
n equity in
strument is any co
ntract that e
viden
ces a residual
interest in
the assets of the
Company after d
educting all
of its
liabilities and includes no obligation to deliver cash or othe
r fin
ancial assets
. The
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Derivative financial ins
tr
ume
nts and hedge accounting
The Company’
s activitie
s expose it t
o the financi
al risks of ch
an
ges in foreign
exchange rates
and
interest r
ates which it
mana
ges u
sing deriv
ative
financial instrume
nts.
The use of derivative financial instruments is governed by the Group’s policies approved by the Board of Directors, which provi
de written
princi
ples on t
he use of der
ivative f
inanc
ial instr
uments con
sistent
with
the Group’
s risk ma
nagement st
rategy
. Changes
in valu
es
of al
l
derivati
ve financial
instruments
are included
within the in
come st
atement unles
s designated
in an effectiv
e cash flow hedge rel
ationsh
ip when
change
s in value
are deferr
ed to othe
r comprehen
sive inco
me or equ
ity respect
ively.
The Company doe
s not use derivati
ve financial
instrument
s for speculat
ive purpos
es.
Derivat
ive financi
al instru
ments are
initially
measured
at fair val
ue on the co
ntract da
te and are s
ubsequen
tly remea
sured to f
air value
a
t each
reporting da
te. The Comp
any design
ates certain der
ivative
s as hedg
es
of the ch
ange of f
air value of
recog
nised asset
s and liab
i
lities (‘fair value
hedges’) or hedges of highly probable forecast transactions or
hedges of foreign currency or interest rate r
isks of firm
commit
ments
(‘cash flow
hedges’). Hedge accounting is discon
tinued w
hen the hedging inst
rum
ent expires
or is
sold, terminated, exercised or no longer q
ualifies for
hedge accoun
ting.
Fair v
alue hedges
The Company’
s policy i
s to use derivat
ive financial
instruments (p
rimaril
y interest rate swa
ps) to convert a
proportion of it
s
fi
xed rate debt to
floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Company desig
nates t
hese as fair
value hedges of intere
st rate risk wi
th changes in fair v
alue
of the he
dging instrum
ent recogn
ised in the in
come statement f
or
the period
together with the ch
anges in the fai
r value of the hedged it
em
due to the hedged risk
, to the extent the hedge
is effective
. Ga
ins and l
osses
relating to
any in
effect
ive port
ion are reco
gnised
imm
ediately in the income statement.
Cash fl
ow hedges
Cash flow hedging is u
sed by the Company to h
edge certain exposure
s to variability in futur
e cash flows. The port
ion of gains o
r losses relating
to chan
ges in the f
air value o
f deriv
atives that
are desi
gnated and
quali
fy as effect
ive cash f
low hedge
s is recogn
ised in o
the
r comprehensiv
e
income; g
ains or los
ses relating
to any ineffect
ive portio
n are re
cogn
ised immed
iately in the inco
me
statemen
t. However, when t
he hedg
ed
transaction re
sults in th
e recognitio
n of a non-fin
ancial asset
o
r a non-financ
ial liabil
ity, the gains
and losses pre
viously r
eco
gnised in
other
compreh
ensive in
come and
accumulated
in equity ar
e transf
erred fr
om equity an
d include
d in the init
ial measurement o
f the cost
of the non-
financi
al asset or non-fin
ancial lia
bility. When the he
dged item is r
ecogn
ised in the in
come statement
, amounts prev
iously reco
gn
ised in othe
r
comprehensiv
e income
and accumul
ated in equity for t
he hedging
in
strument are re
classifie
d to the income st
atement. When hed
ge
accounting
is discont
inued, any g
ain or loss re
cognised in oth
er co
mpr
ehensive income at that time remains in equity and is rec
ognised in the
income st
atement when the hed
ged transact
ion is ultimat
ely recogni
sed in
the in
come statemen
t. If a for
ecast transac
tion is no lon
ger
expected to occur, the gain or loss accumulated in equi
ty is r
ecognise
d immediately in the
income st
atement.
New accounting pronouncements
To the extent applicable the Comp
any will ado
pt new acco
unting polic
ies as set out in
note 1 ‘Basis o
f preparatio
n’ in the con
s
olidated financial statement
s.
Strategic report
Governance
Financials
Other information
218
Vodafone Group Plc
Annual Report 2022
2. Fi
xed a
ssets
Accounting policies
Shares in
Group un
dertakin
gs are st
ated at co
st less any
provisio
n for i
mpairment a
nd capit
al relate
d to share-
based pay
ments.
Contri
butions in
respect of share-base
d payments are recogni
sed in line wi
th the policy
set out in note 7 ‘Sh
are-based payments’
.
The Company
assess
es investme
nts fo
r impairmen
t whenev
er events or ch
anges in
circumsta
nces indi
cate that th
e carry
ing value o
f
an
investmen
t may not be
recover
able. If any
such ind
ication of
impairme
nt exists, the Co
mpany makes an
estimate of the r
ecover
abl
e amount. If
the recover
able amount of the
cash-generat
ing unit is less th
an th
e va
lue of the invest
ment, the in
vestment is
considered to
be
impaired
and is
written do
wn to its recov
erable am
ount. An impairment l
o
ss is re
cognised
immediately in
the income st
atement.
Where there has
been a chang
e in the estima
tes used to determ
ine recoverable amount
and an impairme
nt loss subsequently rev
erse
s, the
carrying
amount of the c
ash-gener
ating unit is in
creased to the
revised estim
ate of its recov
erable amou
nt, not to excee
d the c
arrying amount
that woul
d have bee
n determined
had no imp
airment lo
ss been reco
gnised fo
r the cash-gener
ating unit
in prior y
ears an
d an im
pai
rment loss
reversal
is recognis
ed immedi
ately in the
income s
tatement.
The Company
applies the
same methodol
ogy and assu
mptions use
d by
the Group for goodwill impairment testing purposes, as set out
in note
4 ‘Impairmen
t losses’ to th
e consoli
dated finan
cial statements
. For the purpo
ses of th
e Company’s own
impairment a
ssessment,
th
e Group’s
operations are considered to be a
s
ingle
cash generatin
g
unit
(‘CG
U’) held within th
e Company’s p
rincipal
subsidiary
, Vodafone
Eur
opean
Investment
s. The pool
ing of the Co
mpany’s intere
sts within a
single CG
U signific
antly reduces th
e risk that
movements
in indivi
dual
assumptions use
d during the goodwill imp
airment testing will im
pa
ct the result of
the invest
ment impair
ment assess
ment. Whilst
the
underlying assu
mptions used are a
source of estimation un
certainty,
they do not g
ive rise to a
significant r
isk of adju
stment w
ithin the next
financial year.
Shares in Group u
ndertakings
2022
2021
€m
€m
Cost
1 April
84,313
84,264
Capital contributions arising from
share-based payments
119
136
Contributions received in relation
to share
-based payments
(98)
(87)
31 March
84,334
84,313
Amounts provided for
1 April
928
798
Impairment losses
–
130
31 March
928
928
Net book value
31 March
83,406
83,385
At 31 March 2022
the Company had the following principal subsidiary:
Name
Pr
incipal activity
Country of incorporation
Percentage shareholding
Vodafone Euro
p
ean Investments
Holdin
g
Com
p
an
y
En
g
land
100
Details of
direct an
d indirect r
elated under
takings a
re set ou
t in no
te 31 ‘Related undertakings’ to the
consolidated financial
statem
ents
.
Strategic report
Governance
Financials
Other information
219
Vodafone Group Plc
Annual Report 2022
3. Deb
tors
Accounting policies
Amounts owed by subsidiaries are
classified and recorded at amortised cost and reduced by allowances fo
r expected credit losses
. Estim
ated
future credit loss
es are first re
corded on initial reco
gnition of
a receivable and are based on estimated pro
bability of defaul
t. Individu
al balances
are written off when management deems them not to be collectible.
Derivative financial instruments are measured at f
air
valu
e t
hrough profit
and loss.
2022
2021
€m
€m
Amounts falling due
within one year
Amounts owed by subsidiaries
1
172,03
9
163,667
Taxation recoverable
219
194
Other debtors
10
14
Derivative financial instruments
416
274
172,684
164,149
Amounts falling
due after mor
e than one year
Deferred tax
–
164
Derivative financial instruments
4,288
2,964
4,288
3,128
Notes:
1 Amounts owned by sub
sidiaries are unse
cured, have no fixed date of rep
ayment an
d are repayable on demand with sufficient l
iquidity in the gro
up to flow funds if required
. Therefore expected credit
losses are considered to b
e immaterial.
2 Primarily relates to amounts ow
ed
by group companies due to group relief.
4. Ot
her Inves
tments
Accounting policies
Investment
s are cl
assified
and measured
at amort
ised cost us
ing the ef
fective interest r
ate method, l
ess an
y impairment
.
2022
2021
€m
€m
Collateral
698
3,107
5. Cr
edito
rs
Accounting policies
Capital mar
ket and bank bo
rrowings
Interes
t-bearin
g loans an
d overdraf
ts are in
itially mea
sured at fa
ir value
(which is eq
ual to cost
at incept
ion) and
are sub
seq
uently
measured
at
amortise
d cost using
the effecti
ve interest
rat
e method, except where they are identifi
ed as a hedged it
em in a designated fair
value hedge
relationship. Any difference between the proceeds net of tran
saction costs and the amount due on settlement or redemption of bo
rrowings is
recognised over the
term of the borrowin
g.
2022
2021
€m
€m
Amounts falling
due within one year
Bonds
1,875
2,251
Bank loans
3
–
Collateral liabilities
2,914
962
Other borrowings
6
36
Bank borrowings secured ag
ainst Indian assets
1,382
862
Amounts owed to subsidiaries
1
161,114
158,017
Derivative financial instruments
141
109
Other creditors
20
92
Accruals and deferred income
2
1,458
432
168,913
162,761
Amounts falling
due after mor
e than one year
Deferred tax
338
–
Bonds
43,967
42,447
Bank loans
2
350
Bank borrowings secured against Indian assets
–
385
Derivative financial instruments
1,51
1
3,940
45,818
47,122
Notes:
1 Amounts
owed to subsidia
ries are unsecured,
have
no fixed date of repayment
and are repayable on demand.
2 Includes €1,434 m
illion (2021: €339 mi
llion) payable in
relat
ion to the irrev
ocable and non-dis
cretionary share buyback prog
ramme announced in March
2022 (2021: announced March
2021).
Notes to the Company financial statements (continued)
Strategic report
Governance
Financials
Other information
220
Vodafone Group Plc
Annual Report 2022
Included in amounts falling due after more than one year are bonds of €29,206 milli
on (
2021:
€30,
337) which are due in more tha
n fi
ve years
from 1 A
pril 20
22 and are
payabl
e otherwi
se than
by instalm
ents. In
terest paya
ble on th
ese bond
s ranges
from 0.5%
to 7.875
% (20
21: 0.0%
to
7.87
5%).
6. Cal
led up sh
are capital
Accounting policies
Equity in
struments
issued by
the Compan
y are reco
rded at th
e amount of
the procee
ds receive
d, net of
direct issu
ance co
sts.
2022
2021
Number €m
Numbe
r
€m
Ordinary shares of 20
20
Ū
21
US cents
each allotted,
issued and fu
lly paid:
1,2,3
1 April
28,816,83
5,778
4,797
28,815,91
4,978
4,797
Allotted during the year
792,090
–
920,800
–
31 March
28,817,627,868
4,797
28,816,835,77
8
4,797
Notes:
1
At 31
March 2022 there were 50,000
(2021: 50,000) 7% cumula
tive fixed rate s
hares of £1 each in iss
ue.
2
At 31
March 2022 the Group
held 447,576,522 (2021: 592,642,309)
treasury shares with a
nominal value of €75 mi
llion (2021: €9
9 m
illion). The m
arket value of shares he
ld was €661 million
(2021: €918 million
). During the year, 68,306,442 (2021:
63,830,400) tr
easury
shares were reissue
d under Group share schemes.
3
On 5
March 2019 the Group anno
unced the placing of
subordinated manda
tory convertible bond
s totalling £1.72 billio
n with a 2
year
maturity date in 2021
and £1.72 billion wit
h a 3 year
maturity date in
2022. During the year, 1
,518,629,693 treasury share
s were issued in se
ttlement of tranche 2
of the maturing
su
bordinated man
datory con
vertible bond, whilst in th
e year ended
31 March 2021, 1,426,793,872 o
rdinary shares were
issued in sett
lement of tranche 1.
For further
details see note 21 ‘
Borrowing
s’ in the conso
lidated financial sta
tements.
7. Sh
are-b
ased p
ayme
nts
Accounting policies
The Group oper
ates a number of e
quity-se
ttled sh
are-base
d payment plan
s for the e
mp
loyees o
f subsidi
aries usin
g the Company’s
e
quity
instrument
s. The fair value of
the compen
sation given in r
esp
ect of these share-bas
ed payment pl
ans is re
cognised as
a capital
contri
bution to
the Company’
s subsid
iaries o
ver the vestin
g period. Th
e capital co
ntributio
n is reduce
d by any
payment
s receive
d from subs
idiar
ie
s in respect
of
these share
-based paymen
ts.
The Company
curren
tly uses a nu
mber of equi
ty-settled s
hare plan
s to grant o
ptions an
d shares to th
e Director
s and empl
oyees of
its
subsidia
ries.
At 31 March 2022,
the
Compa
ny ha
d 61
million ordinary share options outstanding (2021: 62 million).
The Company h
as made cap
ital contributio
ns to its su
bsidiarie
s in
relation to share-based payments. At 31 March 2022, the c
umul
ative capita
l
contribution net of payments received from subsidiaries was €239 million (2021: €218 million). During the year ended 31 March 2
022, the tot
al
capital
contribution arising from
share-based payments wa
s €119 million
(2021: €136
million), with payments
of €98
million (202
1: €8
7 million)
received from subsidiaries.
Full details of share-based payments, share option scheme
s and sh
are plan
s are discl
osed in n
ote 26 ‘Sh
are-base
d
payments’ to the
consolidated financial statements.
8. Re
serve
s
The Board
is responsi
ble for the Gro
up’s capi
tal manage
ment including the appro
val of
dividend
s. This inclu
des an assessm
ent of
both
the leve
l
of reserv
es legally
avail
able for di
stribut
ion and co
nsideration
as to whe
ther the Co
mpany woul
d be solve
nt and re
tain suff
icie
nt liqu
idity
following any p
ro
pos
ed distri
buti
on.
As Voda
fone Group Plc is a
Group holding compa
ny with no direct
oper
ations, its ability
to
make shar
eholder distribut
ions is de
pendent on its
ability to re
ceive fu
nds for su
ch purposes from it
s subsid
iaries
in a m
anner whi
ch creates
profits
availabl
e for dis
tributio
n f
or the Co
mpany. The
major fac
tors that
impact the
ability of
the Company to
access pr
ofits held in
subsidiar
y companie
s at an a
ppropriate l
evel to
fulf
il its nee
ds for
distri
butable
reserve
s on an on
going b
asis inclu
de:

the absolute size of the profit pools either
currently available for distribution or c
apable of realisation into distri
butable
reserves in the
relevant entities;

the location of these entit
ies in
the Group’s cor
porate structure;

profit a
nd cash flow ge
ner
ation
in those entities; and

the risk of
adverse
changes in
busin
ess valuatio
ns givi
ng rise to in
vestm
ent impairm
ent char
ges, redu
cing pro
fits avail
able for
distribution
.
The Group’s consolidated reser
ves set out on page 131 do not
reflect the profits available for distribution in the Group.
Strategic report
Governance
Financials
Other information
221
Vodafone Group Plc
Annual Report 2022
9. Equit
y dividend
s
Accounting policies
Dividen
ds paid and received are inc
luded in the Company financia
l
statements in the period in
which the relate
d dividends are a
ctually paid or
receiv
ed or, in r
espect of the C
ompany’s fi
nal divid
end for the yea
r, approved by s
hareholders.
2022
2021
€m
€m
Declared
during the financial
year
Final dividend for the year ended 31
March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share)
1,25
4
1,205
Interim dividend for the year ende
d 31
March 2022: 4.50 eurocents per share
(2021: 4.50 eurocents per share)
1,22
9
1,207
2,483
2,412
Proposed after the b
alance sheet date
and not recognised
as a liability
Final dividend for the year ended 31
March 2022: 4.50 eurocents per share
(2021: 4.50 eurocents per share)
1,26
5
1,260
10. Contingent li
abilities and lega
l proceedi
ngs
2022
2021
€m
€m
Other guarantees
3,427
3,340
Oth
er gu
arant
ees and c
ontin
gent li
abili
ties
Other guarantees principally comprise the Compa
ny’s guarantee of the
Group’s 50%
share of a US$3.5 billion loan facility (2021:
US$3.5 billio
n
loan facility), which forms part of the Group’s overall joint venture investment in TPG Tele
com Li
mited an
d the guarantee of €1
.8
billion (
2021:
€1.8 bil
lion) of su
bsidiary s
pectrum
payments.
The Company
will guar
antee the
debts and l
iabiliti
es of certa
in of
its UK sub
sidiaries at the balance shee
t
d
ate in accordance
with
section 47
9C
of the Comp
anies Act
2006. The Co
mpany has as
sessed the
probability
of loss under these guar
antees as remote.
As detailed in note 2
5 ‘Post employment benefit
s’ to the cons
olidated finan
cial statements, th
e Company is the sponsor of th
e G
roup’s main
defined benefit sch
eme in the UK, being th
e Vodafone Group UK Pension Scheme (‘Vodafone UK pl
an’). The results, assets and liab
ilit
ies
associ
ated with the
Vodafon
e UK plan
are recogn
ised in th
e financ
ial stateme
nts of Vod
afone Lim
ited and
Vodafone Gr
oup Ser
vices
Limited
.
As detaile
d in note 29 ‘Contin
gent liab
ilities and le
gal procee
dings’ to the consoli
dated financial state
ments, the Company has
co
venanted to
provide
security
on the Gro
up’s perf
orman
ce bond
s and also
in
fa
vour
of the trustee of the
Vodafone G
roup UK
Pension Scheme and
the
Trustees of THUS Plc Group Scheme.
Legal pro
ceedings
Details re
garding cert
ain legal actio
ns which invo
lve the Comp
any
are set out in note 29 ‘Contingent liabil
ities and legal proc
eedin
gs’ to
the
consolidated financial statements.
11. O
ther ma
tters
The auditor’s remuner
ation for the current year in res
pect of
audit
and audit-related services wa
s €4 milli
o
n
(2021: €3 m
illion
) and for non-audit
services w
as €nil (2
021: €nil
).
The Company had t
wo (2021: two) employ
ees throughout the ye
ar, be
ing th
e executive dire
ctors. They ar
e remunerated by t
he Compa
ny for
their servic
es to the Group a
s a whole. N
o remuneration was
paid to the
m specifically in r
espect of their
services to Vo
dafone
Group P
lc for
either year. Full deta
ils of the Directors’ remun
eration are di
sclosed in t
he ‘Annual Report on Remuneratio
n’ on pages 99 to 11
2 and No
te 23
‘Directors and k
ey management compensation’
on page 191 of
the consolidated financia
l statements.
Vodafo
ne Group Pl
c is in
corporat
ed and do
micile
d in Engl
and and
Wales (reg
istrati
on numb
er 1833679
). The
registe
red add
ress of
the
Company is Vo
dafone Hou
se, The Connect
ion, Newbury,
Berkshire
, RG14 2FN
, England.
Notes to the Company financial statements (continued)
Strategic report
Governance
Financials
Other information
222
Vodafone Group Plc
Annual Report 2022
In the discussion of
the Group’s repo
rted
operatin
g
results
,
non-GAAP meas
ures are p
re
sented to p
rovide read
ers w
ith addi
tional
fi
nanc
ial
information that is regularly reviewed by management. This additional information presented is not uniformly defined by all com
pani
es
includin
g those in the Gro
up’s indus
try. Accordingly
, it may not
be comparable with sim
ilarly titled measures an
d disclosures b
y other
compani
es. Addit
ionally
, certai
n informat
ion present
ed is der
ived fro
m amount
s calculate
d in accor
dance with I
FRS but i
s not it
sel
f a measure
defined under GAAP. Such measures should not be viewed in isolation or as an alternati
ve to the equivalent GAAP measure.
The non-GAAP measure
s discussed in thi
s document are l
isted belo
w.
Non-GAAP measure
Defined on page
Closest equivalent GAAP measure
Reconcile
d on page
Performance me
trics
Adjusted EBITDAaL
Previously referred to as A
djusted EBITDA in prior years. The metrics
have the same definition.
Page 224
Operating profit
Pa
ge 227
Organic Adjusted EBITDAaL growth
Pa
ge 224
Not applicable
Not applicable
Organic percentage point change in
Adjusted EBITDAaL margin
Page 224
Not ap
plicable
Not applicable
Organic revenue growth
Pa
ge 224
Revenue
Pa
ges 225 and 226
Organic service revenue growth
Page 224
Service revenue
Pages 225 and 226
Organic mobile service revenue growth
Pa
ge 224
Service revenue
Pages 225 and 226
Organic fixed service revenue growth
Page 224
Service revenue
Pages 225 and 226
Organic Vodafone
Business service revenue
growth
Page 224
Servic
e revenue
Pages 225 and 226
Organic financial serv
ices revenue growth in
South Africa
Page 224
Servic
e revenue
Pages 225 and 226
Organic retail service revenue growth in
Germany
Page 224
Servic
e revenue
Pages 225 and 226
Other metrics
Adjusted profit attributable to owners of the
parent
Page 227
Profit attributable to owners of th
e parent
Page 227
Adjusted basic earnings per share
Page 227
Basic earnings per share
Page 228
Cash flow, funding and capital
allocation me
trics
Free cash flow
Page 228
Inflow from operating activities
Page 229
Adjusted free cash flow
Previously referred to as Fr
ee cash flow (pre spe
ctrum, restr
ucturing
and integration costs) but now excludes Vantage Towers growt
h
capital expenditure.
Page 228
Inflow from operating activities
Pages 31 and 229
Gross debt
Page 228
Borrowings
Page 229
Net debt
Page 228
Borrowing
s less cash and cash equivalents
Page 229
Pre-tax ROCE (controlled)
Page 230
ROCE calculated using GAAP measures
Pages 230 and 231
Post-tax ROCE (controlled and
associates/joint ventures)
Page 230
ROCE ca
lculated using GAAP measures
Pages 230 and 231
Financing and T
axation metrics
Adjusted net financing costs
Page 232
Net financing
costs
Page 30
Adjusted profit before taxation
Page 232
Profit before taxation
Pa
ge 232
Adjusted income tax expense
Page 232
Income tax expense
Page 232
Adjusted effective tax rate
Page 232
Income tax expense
Page 232
Adjusted share of results of equity
accounted associates and joint ventures
Page 232
Share of results of equity ac
counted
associates and joint ventures
Page 233
Adjusted share of results of equity
accounted associates and joint ventures
used in post-tax ROCE
Pa
ge 232
Share of results of equity accounted
associates and joint ventures
Page 233
Non-GAAP measures
Unaudited information
Strategic report
Governance
Financials
Other information
223
Vodafone Group Plc
Annual Report 2022
Performance metri
cs
Non-GAAP measure
Purpose
Definition
Adjusted EBITDAaL
Adjusted EBITDAaL is used in conjunction with
financial measures suc
h as operating pr
ofit to assess
our operating perfo
rmance and profitability.
Adjusted EBITDAaL is operating profit after
depreciation on lease-rela
ted rig
ht of use assets and
interest on leases but excluding depreciation,
amortisation and gains/losse
s on disposal of owned
assets and excluding share of results of equity
accounted associates an
d joint ventures, impairment
losses, restructuring costs
arising from discrete
restructuring plans, other income
and expense and
significant items that
are not considered by
management to be reflect
ive of the underlying
performance of the Group.
It is a key external metric
used by
the investor
community to assess perfo
rmance of
our operations.
It is our segment p
erformance measure in
accordance with IFRS 8 (O
perating Segments).
Adjusted
EBITDAaL mar
gin is Adju
sted EBITDAa
L divided by Re
venue.
Organic growth
All amounts marked with an ‘*’
in this document re
present organic gro
wth which presents performance o
n a comparable basis, excl
udin
g the
impact of f
oreign exchan
ge rates,
mergers an
d acquisit
ions and othe
r adjustments to
improve th
e comparab
ility of results
betwee
n periods.
When calculating
organic growth
, the FY21
result
s for Va
ntage To
we
rs and rel
evant operatin
g entities have been
adjusted to refl
ect a full year of
operation on a pro forma basis in order to be comparable to FY22.
Organic growth is calculated
for r
evenue a
n
d p
rofit
abili
ty metrics,
as
fol
lows:

Adjusted EBITDAaL;

Percentage
point chang
e in Adjuste
d EBITDAaL margi
n;

Revenue;

Service reve
nue;

Mobile service revenue;

Fixed service revenue;

Vo
dafo
ne Bu
siness
serv
ice re
venu
e;

Financial serv
ices revenue in South
Africa; and

Retail service revenue in Germany.
Whilst organic growth
is not intended to b
e a substitute for report
ed growth, nor is it superior
to reported g
rowth, we believe
tha
t the measure
provides useful and necessary information to investors and other interested parties for the following reasons:

It provides additional information on underlying growth of the busines
s without the effect of
certain f
actors un
related to
its operat
ing
performance;

It is used for internal
performance analysis; and

It facili
t
ates c
o
mparabi
lity of underlying growth with other
co
mpanies (although the term ‘or
ganic’ is not
a defined ter
m under
GAAP and may
not, therefore, be comparable with similar
ly
title
d meas
ures r
eported
by oth
er co
mpani
es).
We have not
provid
ed a comp
arative in res
pect of o
rganic
growth rates
as the curr
ent rates de
scribe the
change be
tween the
begi
nning and
end of the
current per
iod,
with such chan
ges be
ing expl
ained by
the comment
ary in this
document
. If com
parative
s were pro
vided,
si
gnificant
sections o
f the com
mentary for
prior per
iods woul
d also nee
d to be incl
uded, redu
cing the useful
ness an
d transpar
ency of thi
s d
ocument.
Non-GAAP measures (continued)
Unaudited information
Strategic report
Governance
Financials
Other information
224
Vodafone Group Plc
Annual Report 2022
Reported
M&A
and
Foreign
Organic
FY2
2 FY21
growth
Other exchange
growth*
€m €m
% pps
pps
%
Year ended 31 March
2022
Service revenue
Germany
11,616
11,5
20
0.8
0.3
–
1.1
Mobile service revenue
5,124
5,056
1.3
0.5
–
1.8
Fixed service revenue
6,492
6,464
0.4
0.1
–
0.5
Italy
4,379
4,458
(1.8)
0.0
–
(1.8)
Mobile service revenue
3,141
3,244
(3.2)
–
–
(3.2)
Fixed service revenue
1,238
1,214
2.0
–
–
2.0
UK
5,154
4,848
6.3
–
(5.0)
1.3
Mobile service revenue
3,697
3,428
7.8
–
(5.0)
2.8
Fixed service revenue
1,457
1,420
2.6
–
(4.9)
(2.3)
Spain
3,714
3,788
(2.0)
–
–
(2.0)
Other Europe
5,001
4,859
2.9
0.7
(0.6)
3.0
Vodacom
4,635
4,083
13.5
–
(8.9)
4.6
Other Markets
3,420
3,312
3.3
–
16.1
19.4
Vantage Towers
–
–
–
–
–
–
Common Functions
522
470
Eliminations
(238)
(197)
Total service revenue
38,203
37,141
2.9
0.2
(0
.5)
2.6
Other revenue
7,37
7
6,66
8
Reven
ue
45,580
43,809
4.0
0.0
(0.5)
3.5
Other growth metrics
Vodafone Business
- Service revenue
10,316
10,076
2.4
(0.4)
(1.2)
0.8
South Africa - Financial servic
es re
venue
155
125
24.0
-
(11.6)
12.4
Germany - Retail service revenue
11,348
11,201
1.3
0.3
-
1.6
Adjusted EBITDAaL
Germany
5,669
5,634
0.6
5.9
–
6.5
Italy
1,699
1,597
6.4
–
–
6.4
UK
1,395
1,367
2.0
6.0
(4.7)
3.3
Spain
957
1,04
4
(8.3)
7.2
–
(1.1)
Other Europe
1,606
1,760
(8.8)
10.8
(0.6)
1.4
Vodacom
2,125
1,873
13.5
–
(10.1)
3.4
Other Markets
1,335
1,228
8.7
–
14.3
23.0
Vantage Towers
619
–
–
–
–
–
Common Functions
1
(197)
(117)
Group
15,208
14,386
5.7
0.1
(0.8)
5.0
Perce
ntage point change in
Adju
st
ed EBITDAaL margin
Germany
43.2%
43.4%
(0.2)
2.3
–
2.1
Italy
33.8%
31.9%
1.9
–
–
1.9
UK
21.2%
22.2%
(1.0)
1.3
–
0.3
Spain
22.9%
25.1%
(2.2)
1.9
–
(0.3)
Other Europe
28.4%
31.7%
(3.3)
3.2
(0.1)
(0.2)
Vodacom
35.5%
36.2%
(0.7)
–
(0.3)
(1.0)
Other Markets
34.9%
32.6%
2.3
–
(1.2)
1.1
Vantage Towers
49.4%
–
–
–
–
–
Group
33.4
%
32.8
%
0.6
–
(0.1)
0.5
Note:
1
Common Functions
Adjusted EBITDAa
L includ
es a non-recurri
ng char
ge in re
lation t
o the impairment of
prior year rec
eivables.
Strategic report
Governance
Financials
Other information
225
Vodafone Group Plc
Annual Report 2022
Reported
M&
A and
F
oreign
Organic
Q4 FY22
Q4 FY21
growth Othe
r
exchange
growth*
€m €m
% pps pps
%
Quarter ended 31 March 2022
Service revenue
Germany
2,903
2,885
0.6
0.2
–
0.8
Mobile service revenue
1,282
1,274
0.6
1.8
–
2.4
Fixed service revenue
1,621
1,611
0.6
(1.0)
–
(0.4)
Italy
1,085
1,084
0.1
(0.9)
–
(0.8)
Mobile service revenue
758
788
(3.8)
0.7
–
(3.1)
Fixed service revenue
327
296
10.5
(5.2)
–
5.3
UK
1,34
1
1,231
8.9
(2.3)
(4.6)
2.0
Mobile service revenue
972
880
10.5
–
(4.6)
5.9
Fixed service revenue
369
351
5.1
(7.3)
(4.8)
(7.0)
Spain
908
951
(4.5)
(0.6)
-
(5.1)
Other Europe
1,242
1,233
0.7
2.6
(0.6)
2.7
Vodacom
1,192
1,078
10.6
(0.1)
(7.4)
3.1
Other Markets
801
827
(3.1)
(0.1)
23.0
19.8
Vantage Towers
–
–
–
–
–
–
Common Functions
134
136
Eliminations
(60)
(59)
Total service revenue
9,546
9,366
1.9
(0.1)
0.2
2.0
Other revenue
1,861
1,815
Reven
ue
11,407
11,181
2.0
(0.1)
0.2
2.1
Other growth metrics
Germany - Retail service revenue
2,84
1
2,812
1.0
0.2
-
1.2
Reported
M&A
an
d
Foreign
Organic
Q3 F
Y22
Q3 FY21
growth Other
exchange
growth*
€m €m
% pps pps
%
Quarter ended 31
December 2021
Service revenue
Germany
2,93
6
2,912
0.8
0.3
–
1.1
Mobile service revenue
1,301
1,279
1.7
–
–
1.7
Fixed service revenue
1,635
1,633
0.1
0.6
–
0.7
Italy
1,10
7
1,125
(1.6)
0.3
–
(1.3)
Mobile service revenue
794
818
(2.9)
–
–
(2.9)
Fixed service revenue
313
307
2.0
1.1
–
3.1
UK
1,292
1,216
6.3
1.1
(6.5)
0.9
Mobile service revenue
928
848
9.4
–
(6.8)
2.6
Fixed service revenue
364
368
(1.1)
3.5
(5.7)
(3.3)
Spain
940
957
(1.8)
0.2
–
(1.6)
Other Europe
1,257
1,215
3.5
0.2
(0.8)
2.9
Vodacom
1,172
1,056
11.0
–
(6.6)
4.4
Other Markets
867
806
7.6
–
12.2
19.8
Vantage Towers
–
–
–
–
–
–
Common Functions
136
115
Eliminations
(60)
(45)
Total service revenue
9,647
9,357
3.1
0.4
(0.8)
2.7
Other revenue
2,03
7
1,844
Reven
ue
11,684
11,201
4.3
0.2
(0.8)
3.7
Other growth metrics
South Africa - Financ
ial servic
es revenue
39
33
18.2
–
(6.5)
11.7
Germany - Retail service revenue
2,871
2,832
1.4
0.3
–
1.7
Non-GAAP measures (continued)
Unaudited information
Strategic report
Governance
Financials
Other information
226
Vodafone Group Plc
Annual Report 2022
Other metri
cs
Non-GAAP measure
Purpose
Definition
Adjusted profit attributable
to owners of the parent
This metric is used in the calcula
tion of ad
justed basic
earnings per share.
Adjusted profit attributable
to owners of the parent
excludes restructuring costs
arising from discrete
restructuring plans, amortisat
ion of customer bases
and brand intangible assets, impairment losses, other
income and expense and mark-to-ma
rket and foreign
exchange movements, together with related tax
effects.
Adjusted basic earnings per
share
This performance measure is
used in discussions with
the investor community.
Adjusted basic earnings p
er share is Adjusted profit
attributable to owners of t
he parent divided by the
weighted average number of shares outstanding. This
is the same denomi
nator used when calc
ulating basic
earnings / (loss) per share.
Adjusted EBITDAaL and Adjusted profit att
ribu
tabl
e to owners of the parent
The table below recon
ciles Adjusted EBITDA
aL and Adjusted profit
attributable to owner
s of the pa
rent to their clo
sest equivale
nt GAAP
measures
, being
Operatin
g profi
t and Profit
attri
butable to o
wners of
the parent
, respe
ctively.
FY22 FY
21
Reported
Adjustments Adjusted
Reported
Adjustments Adjusted
€m €m €m €m €m €m
Adjusted EBITDAaL
15,208
–
15,208
14,386
–
14,386
Restructuring costs
(346)
346
–
(356)
356
–
Interest on lease liabilities
398
–
398
374
–
374
Loss on disposal of pr
operty, plant & equipment
and intangible assets
(28)
–
(28)
(30)
–
(30)
Depreciation and amortisation on owned assets
1
(9,858)
509
(9,
349)
(10,187)
488
(9,6
99)
Share of results of equity
accounted associates
and joint ventures
2
211
250
461
342
90
432
Other income
79
(79)
–
568
(568)
–
Operating profit
5,664
1,026
6,690
5,097
366
5,463
Investment income
254
–
254
330
–
330
Financing costs
(1,964)
28
(1,
936)
(1,027)
(1,0
68)
(2,095)
Profit before taxation
3,954
1,054
5,008
4,400
(702)
3,698
Income tax expense
(1,33
0)
61
(1,269)
(3,864)
2,985
(879)
Profit for the fi
nancial year
2,624
1,115
3,739
536
2,283
2,819
Profit attributable to:
- Owners of the parent
2,088
1,111
3,199
112
2,278
2,390
- Non-controlled interests
536
4
540
424
5
429
Profit for the fi
nancial year
2,624
1,115
3,739
536
2,283
2,819
Notes:
1
Reported depreciation and
amortisation
excludes de
preciation on
le
ased assets and lo
ss on disposa
l of leased assets i
ncluded wi
th
in Adjusted EBIT
DAaL. Refer to Ad
ditional Inf
ormation on pa
ge
233 for an analys
is of depreciatio
n and amortisati
on. The adjustments of €509 m
illion (FY21: €488
million) relate t
o amortisati
on of customer bases
and brand
intangible as
sets.
2
Refer t
o page 233
for a breakdown o
f the adjustments to Share of results of equity account
ed associates and joint ventures to d
eri
ve Adjusted share o
f results of equity
accounted associ
ates and
joint ventures.
Strategic report
Governance
Financials
Other information
227
Vodafone Group Plc
Annual Report 2022
Adju
sted
basic
earn
ing
s per
share
The reconcil
iation of adju
sted basic
earnings per sh
are to the c
loses
t equiva
len
t GAAP
meas
ure, ba
sic
earning
s per
share,
is pr
ovided below.
FY22 FY21
€m €m
Profit attributable to owners of the parent
2,088
112
Adjusted profit attributable
to owners of the parent
3,199
2,390
Million Million
Weighted average number of
shares outstanding - Basic
29,01
2
29,592
eurocents e
urocents
Basic earnin
gs per share
7.20c
0.38c
Adjusted basic earnings per share
11.03c
8.08c
Cash flow, funding and capital allocation
metri
cs
Cash flow and funding
Non-GAAP measure
Purpose
Definition
Free cash flow
Internal performance reporting.
Free cash flow is Adjusted
EBITDAaL after cash flows
in relation to capital additions, working capital,
disposal of property, plant and equipment,
restructuring costs arising fr
om discrete restructuring
plans, integration capital
additions and working
capital related items, li
cences and spectrum, interest
received and paid, taxation, dividends received from
associates and investments,
dividends paid to non-
controlling shareholders in subsidia
ries and
payments in respect of lease liabilities.
External metric used by investor community.
Assists comparability with other companies,
although our metric may not be di
rectly
comparable to similar
ly titled measures used by
other companies.
Adjusted free cash flow
Internal performance reporting.
Adjusted free cash flow is Free cash flow bef
ore
licences and spectrum, re
structuring costs arising
from discrete restructuring pl
ans, integration capital
additions and working capita
l related items, M&A and
Vantage Towers growth
capital expenditure.
This non-GAAP measure has changed for the year
ended 31 March 2022 due to
the change in business
model explained in Note 2 'Revenue disaggregation
and segmental analysis'. Adjus
ted free cash flow now
excludes Vantage Towers
growth capital expenditure.
This change was made so the measure alig
ns to the
basis on which outl
ook guidance is pr
ovided and so is
a more useful metric for
the inves
tor community.
Growth capital expenditure
is total capital
expenditure excluding maintenance-type
expenditure.
External metric used by investor community.
Setting director and ma
nagement remuneration.
Key external metric used to evaluate liq
uidity and
the cash generated by
our operations.
Gross debt
Prominent metric used by debt rating agencies and
the investor community.
Non-current borrowings a
nd curre
nt borrowings,
excluding lease liabilities
, collateral liabilities and
borrowings specifica
lly secured against
Indian assets.
Net debt
Prominent metric used by debt rating agencies and
the investor community.
Gross debt less cash and cash equivalents, short-term
investments, derivative financial instruments
excluding mark-to-market adjustments and net
collateral assets.
Non-GAAP measures (continued)
Unaudited information
Strategic report
Governance
Financials
Other information
228
Vodafone Group Plc
Annual Report 2022
Cash flow and funding (continued)
The tables below present: (
i) the reconciliation between Inflow from operating acti
vities and Free cash flow and (ii) the recon
cili
ation between
Borrowing
s, Gross de
bt and Net de
bt.
FY22
FY21
€m
€m
Inflow from operating act
ivities
18,081
17,215
Net tax paid
925
1,020
Cash gene
rated by operations
19,006
18,235
Capital additions
(8,306)
(7,854)
Working capital movement in
respect of capital additions
157
410
Disposal of property, plant a
nd equip
ment and intangible assets
27
42
Integration capital additions
(314)
(329)
Working capital movement in respect
of integration cap
ital additions
(34)
62
Licences and spectrum
(896)
(1,221)
Interest received and paid
(1,615)
(1,860)
Taxation
(925)
(1,0
20)
Dividends received from associates and joint ventures
638
628
Dividends paid to non-controlling
shareholders in subsidiaries
(539)
(391)
Payments in respect of lease liabilities
(3,943)
(3,897)
Other
53
305
Free cash flow
3,309
3,110
FY22
FY21
€m
€m
Borrowings
(70,092)
(67,760)
Lease liabilities
12,539
13,032
Bank borrowings secured ag
ainst Indian assets
1,38
2
1,247
Collateral liabilities
2,91
4
962
Gross debt
(53,257)
(52,519)
Collateral liabilities
(2,914)
(962)
Cash and cash equivalents
7,496
5,821
Short-term investments
4,795
4,007
Collateral assets
698
3,107
Derivative financial instruments
2,954
(859)
Less mark-to-market (gains
)/losses deferred in hedge reserves
(1,350)
862
Net debt
(41,57
8)
(40,543)
Strategic report
Governance
Financials
Other information
229
Vodafone Group Plc
Annual Report 2022
Return on Capital Employed
Non-GAAP measure
Purpose
Definition
Return on Capital
Employed ('ROCE')
ROCE is a metric used by the investor community
and reflects how efficient
ly we are generating profit
with the capital
we deploy.
We calculate ROCE by divi
ding Operating profit by
the average of capital emp
loyed as reported in the
consolidated statement of f
inancia
l position. Capital
employed includes Borrowings, ca
sh and cash
equivalents, derivative financial instruments included
in trade and other receivab
les/payables, short term
investments, collateral
assets, financial liabilities
under put option ar
rangements and equity.
Pre-tax ROCE (controlled)
Post-tax ROCE
(controlled and
associates/joint ventures)
As above.
We calculate pre-tax ROCE
(contr
olled operations)
by dividing Operating profit excluding interest on
lease liabilities, restructuring
costs arising from
discrete restructuring plans, impairment losses, other
income and expense and the
share of resu
lts of
equity accounted associates
and joint ventures. On a
post-tax basis, the mea
sure includes our adjusted
share of results from associates
and joint ventures
and a notional tax charge.
Capital is equivalent to net
operating assets and
is calculated as
the average of
opening and closing
balances of: pr
operty, plant and
equipment (including Righ
t
-of-Use assets and
liabilities), intangible asse
ts (including goodwill),
operating working ca
pital (including held for sale
assets and excluding derivative balances) and
provisions. Other assets
that do not directly
contribute to returns are excluded
from this measure
and include other inves
tments, current and deferred
tax balances and post
employment benefits. On a
post-tax basis, ROCE
also includes our investments in
associates and joint ventures.
Return
on Capi
tal Emp
loyed
(‘ROCE’
) using G
AAP m
easures
The table below pre
sents the calcul
ation of ROCE using GAA
P measures as repor
ted in the consoli
dated income stat
ement and conso
lidat
ed
statement of f
inancial
position.
FY22 FY
21
€m €m
Operating profit
1
5,664
5,097
Borrowings
70,092
67,760
Cash and cash equivalents
(7,
496)
(5,8
21)
Derivative financial instruments include
d in trade and other receivables
(4,626)
(3,151)
Derivative financial instruments include
d in trade and other payables
1,672
4,010
Short-term investments
(4,795)
(4,
007)
Collateral assets
(698)
(3,107)
Financial liabilities und
er put option arrangements
494
492
Equity
56,977
57,816
Capital employed at end of the year
111,620
113,992
Average capital e
mployed for the year
112,806
115,090
ROCE using
GAAP measures
5.0%
4.4%
Note:
1
Oper
ating profit incl
udes Other income/(expen
se), which includes
merger and acquisit
ion activity that is non
-recurring in natur
e.
Non-GAAP measures (continued)
Unaudited information
Strategic report
Governance
Financials
Other information
230
Vodafone Group Plc
Annual Report 2022
Return on Capital Emp
loyed (‘ROCE’): Non-GAAP
basis
The table below presents the calcul
ation
of
ROCE using non-
GAAP measures and reconc
iling to the closest equ
ivalent GAAP measure
.
FY22 FY
21
€m €m
Operating profit
5,664
5,097
Interest on lease liabilities
(398)
(374)
Restructuring costs
346
356
Other income
(79)
(568)
Share of results of equity ac
counted associates and joint ventures
(211)
(342)
Adjusted operating profit for calc
ulating pre-tax ROCE (controlled)
5,322
4,169
Adjusted share of results of equity ac
counted as
sociates and joint ventures used in post-tax ROCE
1
223
203
Notional tax at adjusted
effective tax rate
2
(1,547)
(1,176)
Adjusted operating profit for ca
lculating post-tax ROCE (con
trolled and associates/joint
ventures)
3,998
3,196
Capital employed for calcul
ating R
OCE on a GAAP basis
111,6
20
113,992
Adjustments to exclude:
- Leases
(12,539)
(13,032)
- Deferred tax assets
(19,089)
(21,569)
- Deferred tax liabilities
520
2,095
- Taxation
recoverable
(296)
(434)
- Taxation payable
864
769
- Other investments
(1,855)
(1,514)
- Associates, joint ventures and
assets held for sale
(5,
227)
(5,
927)
- Pension assets and liabilities
(274)
453
Adjusted capital
employed for calculating pre-tax
ROCE (controlled)
73,724
74,833
Associates, joint ventures and as
sets held for sale
5,227
5,927
Adjusted capital
employed for calculating
post-tax ROCE (controlled and as
sociates/joint
ventures)
78,95
1
80,760
Average capital e
mployed for calculating
pre-tax ROCE (controlled)
74,279
75,470
Average capital e
mployed for calculating
post-tax ROCE (controlled and as
sociates/joint
ventures)
79,85
6
81,143
Pre-tax ROCE (controlled)
7.2%
5.5%
Post-tax ROCE (controlled an
d associates/joi
nt venture
s)
5.0%
3.9%
Notes:
1
Adj
usted share of res
ults of equity accoun
ted associates and j
oint ventures used in po
st-tax ROCE is a non-G
AAP measure.
2
Includes tax at
the Adjusted
effective tax ra
te of 27.9%.
Strategic report
Governance
Financials
Other information
231
Vodafone Group Plc
Annual Report 2022
Financing and Taxation
metrics
Non-GAAP measure
Purpose
Definition
Adjusted net financing
costs
This metric is used by
both management and the
investor community.
Adjusted net financing costs exclud
e mark-to-market
and foreign exchange gains/losses.
This metric is used in the cal
culation of adjusted
basic earnings per share.
Adjusted profit before
taxation
This metric is used in the calcu
lation of the adjusted
effective tax rate (see below).
Adjusted profit before taxation exc
ludes the items
excluded from adjusted
basic earnings per share,
including: amortisation of
customer bases and brand
intangible assets, restruc
turing costs arising from
discrete restructuring plans, other income and
expense and mark-to-market and foreign exchange
movements.
Adjusted income tax
expense
This metric is used in the calcu
lation of the adjusted
effective tax rate (see below).
Adjusted income tax expense ex
cludes the tax effects
of items excluded from
adjusted basic earnings per
share, including: amorti
sation of customer bases and
brand intangible assets, restructuring costs arising
from discrete restructuring plans, other income and
expense and mark-to-market and foreign exchange
movements. It also excludes deferred tax movements
relating to tax losses in Lu
xembourg as well as other
significant one-off items.
Adjusted effective tax rate
This metric is used by
both management and the
investor community.
Adjusted income tax expense (see above) divided by
Adjusted profit before taxation (se
e above).
Adjusted share of results
of equity accounted
associates and joint
ventures
This metric is used in the cal
culation of adjusted
effective tax rate.
Share of results of equity
accounted associates and
j
oint ventures excluding restructuring costs,
amortisation of acquired
customer base and brand
intangible assets and
other income and expense.
Adjusted share of results
of equity accounted
associates and joint
ventures used in post-tax
ROCE
This metric is used in the calcu
lation of post
-tax
ROCE (controlled and
associates/joint ventures).
Share of results of equity
accounted associates and
j
oint ventures excluding restructuring costs and other
income and expense.
Adju
sted
tax m
etric
s
The table below reconciles profit before taxation and income tax
expense to adju
sted profit b
efore taxat
ion, adjuste
d income ta
x ex
pense and
adjuste
d effective t
ax rate.
FY22
FY21
€m
€m
Profit before taxation
3,954
4,400
Adjustments to derive adjusted profit before tax
1,054
(702)
Adjusted profit b
efore taxation
5,008
3,698
Adjusted share of results of equity
accounted associates and joint ventures
(461)
(432)
Adjusted profit b
efore tax for calcu
lating adjusted effective ta
x rate
4,547
3,266
Income tax ex
pense
(1,330)
(3,864)
Tax on adjustments to derive
adjusted profit before tax
(169)
(162)
Adjustments:
- Deferred tax following revaluati
o
n of investments in Luxembourg
1,46
8
2,128
*
- Deferred tax on use of Luxembo
urg losses in the year
327
320
- Recognition of deferr
ed tax asset in Luxembourg
(699)
699
*
- Increase in deferred tax assets in
the UK as a result of a change
in t
he corporate tax rate
(593)
–
- Revaluation of assets for
tax purposes in Italy
(273)
–
Adjusted income tax expense f
or
calculating
adjusted tax rate
(1,269)
(879)
Adjusted effective tax rate
27.9%
26.9%
Note:

During the year ende
d 31 March 2022, we revise
d the calculation of
certain impairment
reversals re
cognised by ou
r Luxembourg ho
lding companies for th
e year ended 31 March
2021; this had no
impact on the a
mount of defer
red tax assets re
co
gnised at that date but
has changed the amou
nt of our unrecog
ni
sed deferred tax assets
by €0.7 billi
on
(unrecognised
losses of €2.8
billion).
Non-GAAP measures (continued)
Unaudited information
Strategic report
Governance
Financials
Other information
232
Vodafone Group Plc
Annual Report 2022
Adjusted share of resul
ts of
e
q
u
ity acco
u
nted as
s
ociates and joi
nt ventures
The table
below recon
ciles adju
sted share o
f results of
equity ac
counted asso
ciates and
joint ven
tures to th
e closest GAA
P equi
valen
t, share of
results of e
quity acco
unted as
sociates an
d joint
ventures.
FY22 FY
21
€m €m
Share of re
sults of equity acco
unted associates and joint ventures
211
342
Restructuring costs
12
3
Other income
–
(142)
Adjusted share of results of
equity accounted
associates and joint vent
ures
used i
n post
-
tax ROCE
223
203
Amortisation of acquired custome
r
base and brand intangible assets
238
229
Adjusted share of results of
equity
accounted associates
and joint
ventures
461
432
Addition
al infor
mation
Analysis of depreciation and am
ortis
ation
The t
able below pre
sents an analy
sis of the differ
ent compon
ents
of de
preciation and a
mortisati
on discussed i
n the d
ocument,
re
conc
iled to the
GAAP am
ounts in
the consolida
ted incom
e stateme
nt.
FY22
FY21
€m
€m
Depreciation on leased as
sets
- included in Adjusted EBITDAaL
3,908
3,914
Depreciation on leased as
sets
- included in Restructuring costs
36
–
Deprec
iation
on leased asset
s
3,944
3,914
Depreciation on owned assets
5,814
5,766
Amortisation of owned
intangible assets
4,044
4,421
Depreci
ation and a
mortisation on
owned
assets
9,858
10,187
Depreciation and amortis
ation on owned assets
included in Restructuring
costs
43
–
–
Total depreci
ation and amortisation o
n owned assets
9,901
10,187
Total depreciation and amortisatio
n on owned and leased assets
13,845
14,101
Loss on disposal of owned fixed assets
28
30
Loss on disposal of leased assets
2
(13)
Depreciati
on and amortisation
- as re
cognised in the cons
olidated inc
ome stateme
nt
13,87
5
14,118
Analysis of tangible and intangible additions
The t
able below pre
sents an an
alysis of the diffe
rent comp
onents
of tan
gible and i
ntangible add
itions
discussed i
n the d
ocument
.
FY22
FY21
€m
€m
Capital additions
8,306
7,854
Integration related
capital additions
314
329
Licence and spectrum additions
901
896
Additions to customer bases
–
1
Additions
9,521
9,080
Intangible assets additions
3,635
3,367
Property, plant and eq
uipment owned additions
5,886
5,713
Total additions
9,521
9,080
Strategic report
Governance
Financials
Other information
233
Vodafone Group Plc
Annual Report 2022
Strategic report
Governance
Financials
Other information
234
Vodafone Group Plc
Annual Report 2022
2021/22 Financial calendar key dates
Ex-dividend date for final dividend
1 June 2022
Record date for final dividend
6 June 2022
AGM
26 July 2022
Final dividend payment
5 August 2022
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Managing your shares via Shareview
Our share Registrar, Equiniti operates a portfolio service, Shareview, for
investors in ordinary shares. This provides our shareholders with online
access to information about their investments as well as a facility to help
manage their holdings online, such as being able to:
–
update your details online including your address and dividend
payment instructions;
–
buy and sell shares easily;
–
receive certain shareholder communications electronically;
–
send your general meeting voting instructions in advance of
shareholder meetings;
–
view information about and join the Vodafone Group plc Dividend
Reinvestment Plan (‘DRIP’); and
–
access your online statements.
Equiniti also offers an internet and telephone share dealing
service
{
to
{
existing shareholders. The service can be obtained at
www.shareview.co.uk.
Shareholders with any queries regarding their holding should contact
Equiniti on the contact details above.
Shareholders may also find the investors section of our corporate website,
vodafone.com/investor, useful for general queries and information about
the Company.
AGM
Our thirty-eighth AGM will be held at The Pavilion, Vodafone House,
Newbury RG14 2FN on 26 July 2022 at 10.00 am.
Shareholder communications
We are taking significant steps to reduce our impact on our planet. The
use of electronic communications, rather than printed paper documents,
means information about the Company can be accessed through emails
or the Company’s website, thus reducing our impact on the environment.
A growing number of our shareholders have opted to receive
communications from us electronically. Shareholders who have done
so
{
will be sent an email alert containing a link to the relevant documents.
We encourage all our shareholders to sign up for this service. You can
register for this service at www.shareview.co.uk or by contacting Equiniti
by the telephone number provided on the left of this page.
See
vodafone.com/investor
for further information about this service
Shareholder information
Strategic report
Governance
Financials
Other information
235
Vodafone Group Plc
Annual Report 2022
ShareGift
We support ShareGift, the charity share donation scheme (registered
charity number 1052686). Through ShareGift, shareholders who
have
{
only a very small number of shares, which might be considered
uneconomic to sell, are able to donate them to charity. Donated shares
are aggregated and sold by ShareGift with the proceeds being passed
on
{
to a wide range of UK charities.
See sharegift.org or call +44 (0)20 7930 3737 for further details.
Landmark Financial Asset Search
We participate in an online service which provides a search facility
for
{
solicitors and probate professionals to quickly and easily trace
UK
{
shareholdings relating to deceased estates.
Visit www.landmarkfas.co.uk or call +44 (0)844 844 9967 for
further
{
information.
Warning to shareholders (“boiler room” scams)
Over recent years we have become aware of investors who have received
unsolicited calls or correspondence, in some cases purporting to have
been issued by us, concerning investment matters. These callers typically
make claims of highly profitable investment opportunities which turn
out
{
to be worthless or simply do not exist. These approaches are usually
made by unauthorised companies and individuals and are commonly
known as “boiler room” scams. Investors are advised to be wary of any
unsolicited advice or offers to buy shares. If it sounds too good to be true,
it often is.
See the FCA website at
fca.org.uk/scamsmart
for
more
b
detailed information about this or similar activities
Dividends
Read more on the dividend amount per share on pages 33 and 222.
Euro dividends
Dividends are declared in euros and paid in euros and pounds sterling
according to where the shareholder is resident. Cash dividends to ADS
holders are paid by the ADS depositary bank in US dollars. This aligns
the
{
Group’s shareholder returns with the primary currency in which we
generate free cash flow. The foreign exchange rates at which dividends
declared in euros are converted into pounds sterling and US dollars are
calculated based on the average exchange rate of the five business days
during the week prior to the payment of the dividend.
Payment of dividends by direct credit
We pay cash dividends directly to shareholders’ bank or building society
accounts. This ensures secure delivery and means dividend payments
are
{
credited to shareholders’ designated accounts on the same day as
payment. A dividend confirmation covering both the interim and final
dividends paid during the financial year is sent to shareholders at the
time
{
of the interim dividend in February. ADS holders may choose to
have
{
their cash dividends paid by cheque from our ADS depository
bank,
{
J.P. Morgan.
Dividend reinvestment plan
We offer a dividend reinvestment plan which allows holders of ordinary
shares who choose to participate to use their cash dividends to acquire
additional shares in the Company. These are purchased on their behalf by
the plan administrator, Equiniti, through a low-cost dealing arrangement.
For ADS holders, J.P. Morgan, through its transfer agent, EQ Shareowner
Services, maintains the Global Invest Direct Program which is a direct
purchase and sale plan for depositary receipts with a dividend reinvestment
facility. See vodafone.com/dividends for further information about
dividend payments or, alternatively, please contact our registrar,
Equiniti
{
or EQ Shareowner Services for ADS holders as applicable.
Contact information for Equiniti and EQ Shareowner Services
can be found on page 234
Taxation of dividends
See page 238 for details on dividend taxation.
Shareholders as at 31 March 2022
Number of ordinary
Number of accounts
% of total of issued shares
1-1,000
289,430
0.03
1,001-5,000
37,014
0.11
5,001-50,000
10,485
0.27
50,001-100,000
470
0.09
100,001-500,000
603
0.46
More than 500,000
1,075
99.04
Major shareholders
As at 13 May 2022, J.P. Morgan, as custodian of our ADR programme,
held
{
approximately 14.5% of our ordinary shares of 20
20/21
US cents each
as nominee. At this date, the total number of ADRs outstanding
was
{
408,917,251.
As at 16 May 2022, 1,445 holders of ordinary shares had registered
addresses in the United States and held a total of approximately 0.0107%
of the ordinary shares of the Company.
At 31 March 2022, the following percentage interests in the ordinary
share capital of the Company, disclosable under the Disclosure Guidance
and Transparency Rules, (‘DTR 5’), have been notified to the Directors.
Shareholder
Shareholding
1
BlackRock, Inc.
2
6.90%
Norges Bank
3.0004%
Notes:
1.
The percentage of voting rights detailed above was calculated at the time of the
relevant
{
disclosures made in accordance with Rule 5 of the Disclosure Guidance and
Transparency Rules.
2.
On 7 February 2022, BlackRock, Inc. disclosed by way of a Schedule 13G filed with
the
{
SEC,
{
beneficial ownership of 2,125,091,980 ordinary shares of the Company as
of
{
31
{
December
{
2021, representing 7.8% of that class of shares at that date.
On 14 May 2022, the Company was informed by Emirates
Telecommunications Group Company (‘Etisalat’) that they have
become
{
Vodafone’s largest shareholder with a 9.8% stake.
On 16 May 2022, the Company was informed by BlackRock, Inc
that
{
their
{
shareholding had increased to 6.98%.
The Company is not aware of any other changes in the interests
disclosed
{
under DTR 5 between 31 March 2022 and 16 May 2022.
As far as the Company is aware, between 1 April 2016 and 16 May 2022, no
shareholder, other than described above, held 3% or more of
{
the voting rights
attributable to the ordinary shares of the Company other
{
than (i)
{
J.P.
{
Morgan,
as
custodian of our ADR programme, (ii)
{
Etisalat,
{
Blackrock, Inc and
Norges Bank (as described above) and (iii)
{
Morgan
{
Stanley, which
owned
{
3.6% of the Company’s ordinary shares
{
at 13
{
February 2018.
The rights attaching to the ordinary shares of the Company held by
these
{
shareholders are identical in all respects to the rights attaching to
all
{
the ordinary shares of the Company. As at 16 May 2022 the Directors
are not
{
aware of any other interest of 3% or more in the ordinary share
capital
{
of the Company. The Company is not directly or indirectly owned
or controlled by any foreign government or any other legal entity. There are
no arrangements known to the Company that could result in a change of
control of the Company.
Other information
Articles of Association and applicable English law
The following description summarises certain provisions of the
Company’s
{
Articles of Association and applicable English law. This
summary is qualified in its entirety by reference to the Companies Act
2006 and the Company’s Articles of Association. The Company is a public
limited company under the laws of England and Wales. The Company is
registered in England and Wales under the name Vodafone Group Public
Limited Company with the registration number 1833679.
Full details on where copies of the Articles of Association
can be obtained are detailed on page 237 under
“Documents on display”
Strategic report
Governance
Financials
Other information
236
Vodafone Group Plc
Annual Report 2022
All of the Company’s ordinary shares are fully paid. Accordingly, no further
contribution of capital may be required by the Company from the holders
of such shares.
English law specifies that any alteration to the Articles of Association
must
{
be approved by a special resolution of the Company’s shareholders.
Articles of Association
The Company’s Articles of Association do not specifically restrict the
objects of the Company.
Directors
The Directors are empowered under the Articles of Association to exercise
all the powers of the Company subject to any restrictions in the Articles
of
{
Association, the Companies Act 2006 (as defined in the Articles of
Association) and any special resolution.
Under the Company’s Articles of Association a Director cannot vote in
respect of any proposal in which the Director, or any person connected
with the Director, has a material interest other than by virtue of the
Director’s interest in the Company’s shares or other securities. However,
this restriction on voting does not apply in certain circumstances as set
out in the Articles of Association.
The Directors are empowered to exercise all the powers of the Company
to borrow money, subject to the limitation that the aggregate amount of
all liabilities and obligations of the Group outstanding at any time shall not
exceed an amount equal to 1.5 times the aggregate of the Group’s share
capital and reserves calculated in the manner prescribed in the Articles
of
{
Association unless sanctioned by an ordinary resolution of the
Company’s shareholders.
The Company can make market purchases of its own shares or agree
to
{
do so in the future provided it is duly authorised by its members in a
general meeting and subject to and in accordance with section 701 of
the
{
Companies Act 2006. Such authority was given at the 2021 AGM.
On
{
9 March 2022, the Company announced the first tranche of the
irrevocable and non-discretionary share buy-back programme as a result
of the maturing of the first tranche of the mandatory convertible bond
(‘MCB’), as announced on 19 March 2021, had concluded. Following the
maturing of the second tranche of the MCB, the Company announced
that a new irrevocable and non-discretionary share buy-back programme
would commence on 17 March 2022. In order to satisfy the conversion
of
{
the second tranche of the MCB, 1,518,629,693 shares were issued from
existing shares held in treasury. Under this programme the Company is
expected to purchase up to the number of ordinary shares of 20
20/21
US
cents each announced for the programme on 9 March 2022. The number
of shares expected to be purchased is below the number permitted to be
purchased by the Company pursuant to the authority granted by the
shareholders at the 2021 AGM.
Read more about the programme
on pages 31-32
At each AGM all Directors shall offer themselves for election or
re-election, as applicable, in accordance with the Company’s Articles
of
{
Association and in the interests of good corporate governance.
Directors are not required under the Company’s Articles of Association
to
{
hold any shares of the Company as a qualification to act as a Director,
although the Executive Directors are required to under the Company’s
Remuneration Policy.
Read more on the Remuneration Policy
on pages 93-98
Rights attaching to the Company’s shares
At 31 March 2022, the issued share capital of the Company was
comprised of 50,000 7% cumulative fixed rate shares of £1.00 each and
28,370,051,346 ordinary shares (excluding treasury shares) of 20
20/21
US
cents each. As at 31 March 2022, 447,576,522 ordinary shares were held
in Treasury.
Dividend rights
Holders of 7% cumulative fixed rate shares are entitled to be paid
in
{
respect of each financial year, or other accounting period of the
Company, a fixed cumulative preferential dividend of 7% p.a. on the
nominal value of the fixed rate shares. A fixed cumulative preferential
dividend may only be paid out of available distributable profits which
the
{
Directors have resolved should be distributed.
The fixed rate shares do not have any other right to share in the
Company’s profits.
Holders of the Company’s ordinary shares may, by ordinary resolution,
declare dividends but may not declare dividends in excess of the amount
recommended by the Directors. The Board of Directors may also pay
interim dividends. No dividend may be paid other than out of profits
available for distribution.
Dividends on ordinary shares can be paid to shareholders in whatever
currency the Directors decide, using an appropriate exchange rate for
any
{
currency conversions which are required.
If a dividend has not been claimed for one year after the date of the
resolution passed at a general meeting declaring that dividend or the
resolution of the Directors providing for payment of that dividend, the
Directors may invest the dividend or use it in some other way for the
benefit of the Company until the dividend is claimed. If the dividend
remains unclaimed for 12 years after the relevant resolution either
declaring that dividend or providing for payment of that dividend,
it
{
will
{
be
{
forfeited and belong to the Company.
Voting rights
At a general meeting of the Company, when voting on substantive
resolutions (i.e. any resolution which is not a procedural resolution) each
shareholder who is entitled to vote and is present in person or by proxy
has one vote for every share held (a poll vote). Procedural resolutions
(such as a resolution to adjourn a general meeting or a resolution on the
choice of Chairman of a general meeting) shall be decided on a show of
hands, where each shareholder who is present at the meeting has one
vote regardless of the number of shares held, unless a poll is demanded.
Shareholders entitled to vote at general meetings may appoint proxies
who are entitled to vote, attend and speak at general meetings. Two
shareholders present in person or by proxy constitute a quorum for
purposes of a general meeting of the Company.
Under English law, shareholders of a public company such as the
Company are not permitted to pass resolutions by written consent.
Record holders of the Company’s ADSs are entitled to attend, speak
and
{
vote on a poll or a show of hands at any general meeting of the
Company’s shareholders by the depositary’s appointment of them
as
{
corporate representatives or proxies with respect to the underlying
ordinary shares represented by their ADSs. Alternatively, holders of ADSs
are entitled to vote by supplying their voting instructions to the depositary
or its nominee who will vote the ordinary shares underlying their ADSs in
accordance with their instructions.
Holders of the Company’s ADSs are entitled to receive notices of
shareholders’ meetings under the terms of the deposit agreement
relating to the ADSs.
Employees who hold shares in a vested nominee share account are able
to vote through the respective plan’s trustees. Note there is now a vested
share account with Computershare (in respect of shares arising from a
SAYE exercise) and Equatex (MyShareBank).
Holders of the Company’s 7% cumulative fixed rate shares are only
entitled to vote on any resolution to vary or abrogate the rights attached
to the fixed rate shares. Holders have one vote for every fully paid 7%
cumulative fixed rate share.
Shareholder information (continued)
Strategic report
Governance
Financials
Other information
237
Vodafone Group Plc
Annual Report 2022
Liquidation rights
In the event of the liquidation of the Company, after payment of all
liabilities and deductions in accordance with English law, the holders of
the Company’s 7% cumulative fixed rate shares would be entitled to a
sum equal to the capital paid up on such shares, together with certain
dividend payments, in priority to holders of the Company’s ordinary
shares. The holders of the fixed rate shares do not have any other right
to
{
share in the Company’s surplus assets.
Pre-emptive rights and new issues of shares
Under section 549 of the Companies Act 2006 Directors are, with certain
exceptions, unable to allot the Company’s ordinary shares or securities
convertible into the Company’s ordinary shares without the authority
of
{
the shareholders in a general meeting. In addition, section 561 of the
Companies Act 2006 imposes further restrictions on the issue of equity
securities (as defined in the Companies Act 2006 which include the
Company’s ordinary shares and securities convertible into ordinary
shares) which are, or are to be, paid up wholly in cash and not first
offered
{
to existing shareholders. The Company’s Articles of Association
allow shareholders to authorise Directors for a period specified in the
relevant resolution to allot (i) relevant securities generally up to an
amount fixed by
{
the shareholders; and (ii) equity securities for cash
other
{
than in connection with a pre-emptive offer up to an amount
specified by
{
the shareholders and free of the pre-emption restriction in
section 561. At the 2021 AGM the amount of relevant securities fixed by
shareholders under (i) above and the amount of equity securities specified
by shareholders under (ii) above were in line with the Pre-Emption Group’s
Statement of
{
Principles.
Further details of such proposals are provided in the 2022 Notice of AGM.
Disclosure of interests in the Company’s shares
There are no provisions in the Articles of Association whereby persons
acquiring, holding or disposing of a certain percentage of the Company’s
shares are required to make disclosure of their ownership percentage
although such requirements exist under the Disclosure Guidance and
Transparency Rules.
General meetings and notices
Subject to the Articles of Association, AGMs are held at such times and
place as determined by the Directors of the Company. The Directors
may
{
also, when they think fit, convene other general meetings of the
Company. General meetings may also be convened on requisition as
provided by the Companies Act 2006.
An AGM is required to be called on not less than 21 days’ notice in
writing.
{
Subject to obtaining shareholder approval on an annual basis,
the
{
Company may call other general meetings on 14 days’ notice.
The
{
Directors may determine that persons entitled to receive notices
of
{
meetings are those persons entered on the register at the close of
business on a day determined by the Directors but not later than 21 days
before the date the relevant notice is sent. The notice may also specify
the record date, the time of which shall be determined in accordance
with
{
the Articles of Association and the Companies Act 2006.
Under section 336 of the Companies Act 2006 the AGM must be held
each calendar year and within six months of the Company’s year end.
Variation of rights
If at any time the Company’s share capital is divided into different classes
of shares, the rights attached to any class may be varied, subject to the
provisions of the Companies Act 2006, either with the consent in writing
of the holders of three quarters in nominal value of the shares of that
class
{
or at a separate meeting of the holders of the shares of that class.
At every such separate meeting all of the provisions of the Articles of
Association relating to proceedings at a general meeting apply, except
that (i) the quorum is to be the number of persons (which must be at least
two) who hold or represent by proxy not less than one third in nominal
value of the issued shares of the class or, if such quorum is not present
on
{
an adjourned meeting, one person who holds shares of the class
regardless of the number of shares he holds; (ii) any person present in
person or by proxy may demand a poll; and (iii) each shareholder will have
one vote per share held in that particular class in the event a poll is taken.
Class rights are deemed not to have been varied by the creation or issue
of new shares ranking equally with or subsequent to that class of shares
in
{
sharing in profits or assets of the Company or by a redemption or
repurchase of the shares by the Company.
Limitations on transfer, voting and shareholding
As far as the Company is aware there are no limitations imposed on the
transfer, holding or voting of the Company’s ordinary shares other than
those limitations that would generally apply to all of the shareholders,
those that apply by law (e.g. due to insider dealing rules) or those that
apply as a result of failure to comply with a notice under section 793
of
{
the Companies Act 2006.
No shareholder has any securities carrying special rights with regard to
control of the Company. The Company is not aware of any agreements
between holders of securities that may result in restrictions on the
transfer of securities.
Documents on display
The Company is subject to the information requirements of the
Exchange
{
Act applicable to foreign private issuers. In accordance with
these requirements the Company files its Annual Report on Form 20-F
and other related documents with the SEC. These documents may be
inspected at the SEC’s public reference rooms located at 100 F Street,
NE
{
Washington, DC 20549. Information on the operation of the public
reference room can be obtained in the United States by calling the SEC
on +1-800-SEC-0330. In addition, some of the Company’s SEC filings,
including all those filed on or after 4 November 2002, are available on
the
{
SEC’s website at sec.gov.
Click to download a copy of the Company’s Articles
of Association. Copies can also be obtained from the
Company’s registered of
ȣ
ce
Material contracts
At the date of this Annual Report the Group is not party to any contracts
that are considered material to its results or operations except for:
–
its EUR 3,840,000,000 (as increased to EUR 3,990,000,000) and
USD
{
3,935,000,000 (as increased to USD 4,004,000,000) revolving
credit facilities which are discussed in note 21 “Borrowings” to the
consolidated statements;
–
the Contribution and Transfer Agreement dated 31 December 2016,
as
{
amended, relating to the contribution and/or transfer of shares in
Ziggo Group Holding B.V. and Vodafone Libertel B.V. to Lynx Global
Europe II B.V. and the formation of the Netherlands joint venture;
–
the Implementation Agreement dated 20 March 2017, as amended,
relating to the combination of the Indian mobile telecommunications
businesses of Vodafone Group and Idea Group as detailed in note 27
“Acquisitions and disposals” to the consolidated financial statements;
–
the Implementation Agreement dated 25 April 2018 relating to the
combination of the businesses of Indus Towers and Bharti Infratel;
–
the Sale and Purchase Agreement dated 9 May 2018 relating to the
purchase of Liberty Global plc’s businesses in Germany, Romania,
Hungary and the Czech Republic;
–
the Transitional Services Agreement dated 31 July 2019 relating
to
{
services and cooperation relating to the sale of Liberty Global plc’s
businesses in Germany, Romania, Hungary and the Czech Republic; and
–
the Deed of Merger dated 31 March 2020 relating to the combination
of Vodafone Italy’s towers with INWIT’s passive network infrastructure.
Exchange controls
There are no UK Government laws, decrees or regulations that restrict or
affect the export or import of capital including, but not limited to, foreign
exchange controls on remittance of dividends on the ordinary shares or
on the conduct of the Group’s operations.
Strategic report
Governance
Financials
Other information
238
Vodafone Group Plc
Annual Report 2022
Taxation
As this is a complex area investors should consult their own tax
adviser
{
regarding the US federal, state and local, the UK and other tax
consequences of owning and disposing of shares and ADSs in their
particular circumstances.
This section describes, primarily for a US holder (as defined below),
in
{
general terms, the principal US federal income tax and UK tax
consequences of owning or disposing of shares or ADSs in the Company
held as capital assets (for US and UK tax purposes). This section does not,
however, cover the tax consequences for members of certain classes of
holders subject to special rules including, for example, US expatriates and
former long-term residents of the United States; officers and employees
of the Company; holders that, directly, indirectly or by attribution,
hold
{
5%
{
or more of the Company’s stock (by vote or value); financial
institutions; insurance companies; individual retirement accounts
and
{
other tax-deferred accounts; tax-exempt organisations; dealers in
securities or
{
currencies; investors that will hold shares or ADSs as part of
straddles, hedging transactions or conversion transactions for US federal
income tax
{
purposes; investors holding shares or ADSs in connection with
a trade or business conducted outside of the US; or US holders whose
functional currency is not the US dollar.
A US holder is a beneficial owner of shares or ADSs that is for US federal
income tax purposes:
–
an individual citizen or resident of the United States;
–
a US domestic corporation;
–
an estate, the income of which is subject to US federal income tax
regardless of its source; or
–
a trust, if a US court can exercise primary supervision over the trust’s
administration and one or more US persons are authorised to control
all substantial decisions of the trust, or the trust has validly elected to
be
{
treated as a domestic trust for US federal income tax purposes.
If an entity or arrangement treated as a partnership for US federal
income
{
tax purposes holds the shares or ADSs, the US federal income
tax
{
treatment of a partner in such partnership will generally depend on
the status of the partner and the tax treatment of the partnership. Holders
that are entities
{
or arrangements treated as partnerships for US federal
income tax
{
purposes should consult their tax advisers concerning the
US
{
federal income tax consequences to them and their partners of
the
{
ownership and disposition of shares or ADSs by the partnership.
This section is based on the US Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, and on the tax laws
of
{
the UK, the Double Taxation Convention between the United States
and the UK (the ‘treaty’) and current HM Revenue and Customs (‘HMRC’)
published practice, all as of the date hereof. These laws and such practice
are subject to change, possibly on a retroactive basis.
This section is further based in part upon the representations of the
depositary and assumes that each obligation in the deposit agreement
and any related agreement will be performed in accordance with
its
{
terms.
For the purposes of the treaty and the US-UK double taxation convention
relating to estate and gift taxes (the ‘Estate Tax Convention’), and for US
federal income tax and UK tax purposes, this section is based on the
assumption that a holder of ADRs evidencing ADSs will generally be
treated as the owner of the shares in the Company represented by
those
{
ADRs. Investors should note that a ruling by the first-tier tax
tribunal
{
in the
{
UK has cast doubt on this view, but HMRC have stated that
they will continue to apply their long-standing practice of regarding the
holder of
{
such ADRs as holding the beneficial interest in the underlying
shares. Similarly, the US Treasury has expressed concern that US holders
of depositary receipts (such as holders of ADRs representing our ADSs)
may be claiming foreign tax credits in situations where an intermediary
in
{
the chain of ownership between such holders and the issuer of the
security underlying the depositary receipts, or a party to whom depositary
receipts or deposited shares are delivered by the depositary prior to
the
{
receipt by
{
the depositary of the corresponding securities, has taken
actions inconsistent with the ownership of the underlying security by
the
{
person claiming the credit, such as a disposition of such security.
Such
{
actions may also be inconsistent with the claiming of the
reduced
{
tax rates that may be applicable to certain dividends received
by
{
certain non-corporate holders, as described below. Accordingly, (i) the
creditability of any UK taxes and (ii) the availability of the reduced tax rates
for any dividends received by certain non-corporate US holders, each as
described below, could be affected by actions taken by such parties or
intermediaries. Generally exchanges of shares for ADRs and ADRs for
shares will not be subject to US federal income tax or to UK tax other
than
{
stamp duty or stamp duty reserve tax.
Taxation of dividends
UK taxation
Under current UK law, there is no requirement to withhold tax from the
dividends that we pay. Shareholders who are within the charge to UK
corporation tax will be subject to corporation tax on the dividends we
pay
{
unless the dividends fall within an exempt class and certain other
conditions are met. It is expected that the dividends we pay would
generally be exempt.
Individual shareholders in the Company who are resident in the UK will
be
{
subject to the income tax on the dividends we pay. Dividends will
be
{
taxable in the UK at the dividend rates applicable where the income
received is above the dividend allowance (currently £2,000 per tax year)
which is taxed at a nil rate. Dividend income is treated as the highest
part
{
of an individual shareholder’s income and the dividend allowance
will
{
count towards the basic or higher rate limits (as applicable) which
may
{
affect the rate of tax due on any dividend income in excess of
the
{
allowance.
US federal income taxation
Subject to the passive foreign investment company (‘PFIC’) rules
described below, a US holder is subject to US federal income taxation
on
{
the gross amount of any dividend we pay out of our current or
accumulated earnings and profits (as determined for US federal
income
{
tax purposes). Distributions in excess of current and accumulated
earnings and profits will be treated as a non-taxable return of capital to
the
{
extent of the US holder’s basis in the shares or ADSs and thereafter
as
{
capital
{
gain.
However, the Company does not maintain calculations of its earnings
and
{
profits in accordance with US federal income tax accounting
principles. US holders should therefore assume that any distribution by
the Company with respect to shares will be reported as ordinary dividend
income. Dividends paid to a non-corporate US holder will be taxable to
the holder at the reduced rate normally applicable to long-term capital
gains provided that certain requirements are met.
Dividends must be included in income when the US holder, in the case
of
{
shares, or the depositary, in the case of ADSs, actually or constructively
receives the dividend and will not be eligible for the dividends-received
deduction generally allowed to US corporations in respect of dividends
received from other US corporations.
Shareholder information (continued)
Strategic report
Governance
Financials
Other information
239
Vodafone Group Plc
Annual Report 2022
The amount of the dividend distribution to be included in income will
be
{
the US dollar value of the pound sterling or euro payments made
determined at the spot pound sterling/US dollar rate or the spot euro/
US
{
dollar rate, as applicable, on the date the dividends are received
by
{
the
{
US
{
holder, in the case of shares, or the depositary, in the case of
ADSs, regardless of whether the payment is in fact converted into US
dollars at that time. If dividends received in pounds sterling or euros are
converted into US dollars on the day they are received, the US holder
generally will not be required to recognise any foreign currency gain or
loss in respect of the dividend income.
Where UK tax is payable on any dividends received, a US holder may be
entitled, subject to certain limitations, to a foreign tax credit in respect of
such taxes.
Taxation of capital gains
UK taxation
A US holder that is not resident in the UK will generally not be liable for
UK
{
tax in respect of any capital gain realised on a disposal of our shares
or
{
ADSs.
However, a US holder may be liable for both UK and US tax in respect of
a
{
gain on the disposal of our shares or ADSs if the US holder:
–
is a citizen of the United States and is resident in the UK;
–
is an individual who realises such a gain during a period of “temporary
non-residence” (broadly, where the individual becomes resident in the
UK, having ceased to be so resident for a period of five years or less,
and
{
was resident in the UK for at least four out of the seven tax years
immediately preceding the year of departure from the UK);
–
is a US domestic corporation resident in the UK by reason of being
centrally managed and controlled in the UK; or
–
is a citizen or a resident of the United States, or a US domestic
corporation, that has used, held or acquired the shares or ADSs in
connection with a branch, agency or permanent establishment in the
UK through which it carries on a trade, profession or vocation in the UK.
In such circumstances, relief from double taxation may be available
under
{
the treaty. Holders who may fall within one of the above categories
should consult their professional advisers.
US federal income taxation
Subject to the PFIC rules described below, a US holder that sells or
otherwise disposes of our shares or ADSs generally will recognise a capital
gain or loss for US federal income tax purposes equal to the difference, if
any, between the US dollar value of the amount realised and the holder’s
adjusted tax basis, determined in US dollars, in the shares or ADSs. This
capital gain or loss will be a long-term capital gain or loss if the US holder’s
holding period in the shares or ADSs exceeds one year.
The gain or loss will generally be income or loss from sources within the
US for foreign tax credit limitation purposes. The deductibility of losses is
subject to limitations.
Additional tax considerations
UK inheritance tax
An individual who is domiciled in the United States (for the purposes of
the Estate Tax Convention) and is not a UK national will not be subject
to
{
UK inheritance tax in respect of our shares or ADSs on the individual’s
death or on a transfer of the shares or ADSs during the individual’s lifetime,
provided that any applicable US federal gift or estate tax is paid, unless
the
{
shares or ADSs are part of the business property of a UK permanent
establishment or pertain to a UK fixed base used for the performance
of
{
independent personal services. Where the shares or ADSs have been
placed in trust by a settlor they may be subject to UK inheritance tax
unless, when the trust was created, the settlor was domiciled in the
United
{
States and was not a UK national. Where the shares or ADSs
are
{
subject to both UK inheritance tax and to US federal gift or estate
tax,
{
the estate tax convention generally provides a credit against
US
{
federal tax liabilities for UK inheritance tax paid.
UK stamp duty and stamp duty reserve tax
Stamp duty will, subject to certain exceptions, be payable on any
instrument transferring our shares to the custodian of the depositary at
the rate of 1.5% on the amount or value of the consideration if on sale or
on the value of such shares if not on sale. Stamp duty reserve tax (‘SDRT’),
at the rate of 1.5% of the amount or value of the consideration or the
value of the shares, could also be payable in these circumstances but
no
{
SDRT will be payable if stamp duty equal to such SDRT liability is paid.
Following rulings of the European Court of Justice and the first-tier tax
tribunal in the UK, HMRC have confirmed that the 1.5% SDRT charge will
not be levied on an issue of shares to a depositary receipt system on the
basis that such a charge is contrary to EU law. The effect of this EU case
law will continue to be recognised and followed in the United Kingdom
pursuant to the provisions of the European Union (Withdrawal) Act 2018,
even though the United Kingdom is no longer part of the EU, and HMRC’s
published practice remains that the 1.5% charge will remain disapplied in
such cases.
No stamp duty should in practice be required to be paid on any transfer of
our ADSs provided that the ADSs and any separate instrument of transfer
are executed and retained at all times outside the UK.
A transfer of our shares in registered form will attract ad valorem stamp
duty generally at the rate of 0.5% of the purchase price of the shares.
There is no charge to ad valorem stamp duty on gifts.
SDRT is generally payable on an unconditional agreement to transfer
our
{
shares in registered form at 0.5% of the amount or value of the
consideration for the transfer, but if, within six years of the date of the
agreement, an instrument transferring the shares is executed and
stamped, any SDRT which has been paid would be repayable or, if the
SDRT has not been paid, the liability to pay the tax (but not necessarily
interest and penalties) would be cancelled. However, an agreement to
transfer our ADSs will not give rise to SDRT.
PFIC rules
We do not believe that our shares or ADSs will be stock of a PFIC
for
{
US
{
federal income tax purposes for our current taxable year or
the
{
foreseeable future. This conclusion is a factual determination
that
{
is
{
made
{
annually and thus is subject to change. If we are a PFIC,
US
{
holders of shares would be required (i) to pay a special US addition
to
{
tax on certain distributions and (ii) any gain realised on the sale
or
{
other
{
disposition of the shares or ADSs would in general not
be
{
treated
{
as
{
a
{
capital gain unless
{
a US holder elects to be taxed
annually
{
on
{
a
{
mark-to-market basis with respect to the shares or ADSs.
Otherwise a US holder would be treated as if he or she has realised such
gain and certain “excess distributions” rateably over the holding period
for
{
the shares or ADSs and would be taxed at the highest tax rate in effect
for each such year to which the gain was allocated. An interest charge in
respect of the tax attributable to each such preceding year beginning with
the first such year in which our shares or ADSs were treated as stock in a
PFIC would also apply. In addition, dividends received from us would not
be eligible for the reduced rate of tax described above under “Taxation of
dividends – US federal income taxation”.
Back-up withholding and information reporting
Payments of dividends and other proceeds to a US holder with respect
to
{
shares or ADSs, by a US paying agent or other US intermediary will
be
{
reported to the Internal Revenue Service and to the US holder as may
be required under applicable regulations. Back-up withholding may apply
to
{
these payments if the US holder fails to provide an accurate taxpayer
identification number or certification of exempt status or fails to comply
with applicable certification requirements.
Certain US holders are not subject to back-up withholding. US holders
should consult their tax advisers about these rules and any other
reporting obligations that may apply to the ownership or disposition
of
{
shares or ADSs, including requirements related to the holding of
certain
{
foreign financial assets.
Strategic report
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Financials
Other information
240
Vodafone Group Plc
Annual Report 2022
The Company was incorporated under English law in 1984 as Racal
Strategic Radio Limited (registered number 1833679). After various
name
{
changes, 20% of Racal Telecom Plc share capital was offered
to
{
the
{
public in October 1988. The Company was fully demerged
from
{
Racal
{
Electronics Plc and became an independent company
in
{
September 1991 at which time it changed its name to Vodafone
Group
{
Plc. Since then we have entered into various transactions which
impacted on the development of the Group. The most significant in the
year ended 31 March 2022 are summarised below.
–
On 24 February 2022, the Group sold 63.6 million shares in Indus
Towers Limited (‘Indus’) through an accelerated book build offering
which generated net proceeds of approximately INR 14.2 billion
(US$189 million). Following this transaction, the Group held
694.2
{
million shares in Indus, equivalent to a 25.8% shareholding.
–
On the same date, Vodafone entered into an agreement with Bharti
Airtel Limited (one of the existing promoters of Indus, ‘Bharti’), to sell
a
{
further 127.1 million shares in Indus, equivalent to 4.7% of Indus’
outstanding share capital. The transaction was completed on
29
{
March
{
2022, following which Vodafone held 567.2 million shares
in
{
Indus, equivalent to a 21.0% shareholding.
–
On 3 March 2022, Vodafone Idea Limited (‘Vi’) announced an equity
raise of up to INR 45 billion (US$600 million) by way of a preferential
allotment (the ‘Vi Capital Raise’). The Vi Capital Raise was completed
on
{
31 March 2022, with the Group contributing INR 33.75 billion
(US$445 million) using the net proceeds realised through the earlier
sale of Indus shares. Following the Vi Capital Raise, Vodafone’s holding
in Vi was equivalent to a 47.6% shareholding.
Read more in our
ȣ
nancial statements, note 12
ȁ
Investments
b
in associate and joint arrangements’
Introduction
Our operating companies are generally subject to regulation
governing
{
their business activities. Such regulation typically
takes
{
the
{
form of industry-specific law and regulation covering
telecommunications services and general competition (antitrust)
law
{
applicable to all activities. The following section describes the
regulatory frameworks and the key
{
regulatory developments at
national
{
and regional level and in the
{
European Union (‘EU’), in which
we
{
had significant interests during the year ended 31 March 2022.
Many
{
of the regulatory developments reported in the following section
involve ongoing proceedings or consideration of potential proceedings
that have not reached a conclusion. Accordingly, we are unable to attach
a specific level of financial risk to our performance from such matters.
European Union (‘EU’)
The European Electronic Communications Code (‘Code’) has updated
the
{
telecoms regulatory framework in Europe. The Code should have
been transposed by Member States in Europe by December 2020.
However, as
{
of end of March 2022, only some of the EU governments
within our
{
footprint have done that: Germany, Italy, Hungary, Greece,
Czech Republic, Netherlands (and UK). In other markets – namely Spain,
Portugal, Romania and Ireland – the law is still in the review and/or
approval process. Given the delay, the European Commission (‘EC’)
has
{
started infringement procedures and warned the remaining
Member
{
States that in case of further delays the breach will be
referred
{
to
{
the Court of Justice of the European Union (‘CJEU’).
In April 2021, the EC published its AI regulation (‘AI Act’) setting out a
number of prohibited AI use cases and new requirements for providers
of
{
high-risk AI. Negotiations on the AI Act are progressing slowly, with
the
{
Council of the European Union (‘Council’) looking to conduct a
first
{
reading on the file before the end of the French Presidency in
June
{
2022, and the European Parliament aiming to adopt its position
in
{
a
{
Plenary vote
{
in
{
November
{
2022, paving the way for trilogue talks
on
{
the
{
file to
{
conclude in early/mid 2023.
Negotiations on the Digital Services Act package (consisting of the
Digital
{
Services Act (‘DSA’) and the Digital Markets Act (‘DMA’)) continue.
On 24
{
March 2022, political negotiators in the EU Institutions reached
agreement on the text of the DMA. This included a number of technical
amendments from the December 2021 text, and compromises relevant
to the financial thresholds for those platforms that fall within scope, the
exact nature of some of the specific obligations (e.g. interoperability) and
also fines (under the agreed text, gatekeepers can be sanctioned up to
10% of their annual worldwide turnover in the case of first infringements,
and up to 20% in the case of repeated infringements). The DMA is
expected to be formally adopted in 2022, and enter into force in
early
{
2023. Negotiations on the DSA are progressing and will likely
be
{
concluded under the Czech Presidency in the second half of
{
2022.
In February 2022, the EC published its proposal for a regulation laying
down harmonised rules on fair access to and fair use of data (the ‘Data
Act’). The Data Act will be a regulation that aims to facilitate the sharing
and reuse of non-personal data in the single market, removing current
obstacles and clarifying the rights of various parties involved in generating
and sharing data. The regulation applies to manufacturers of connected
devices, data holders, recipients, and providers of data processing services
(cloud service providers) who will be subject to new requirements to
support switching and interoperability, while maintaining a minimum
service functionality.
In February 2021, the EC proposed the prolongation of the Roaming
Regulation for 10 years in order to ensure the continuation of Roam-
Like-at-Home (‘RLAH’). The political agreement between the European
Parliament and the Council was reached in December 2021 and
the
{
new
{
regulation shall enter into force on 1 July 2022. The new
regulation
{
reduces the wholesale caps for all services (data, voice
and
{
SMS) and
{
brings new measures on transparency (including on
the
{
use
{
of
{
non-terrestrial networks), quality of service and access to
emergency
{
communications.
History and development
Regulation
Strategic report
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Financials
Other information
241
Vodafone Group Plc
Annual Report 2022
In March 2021, the EC published a ‘Connectivity Toolbox’, which
is
{
a
{
joint
{
deliverable of Member States and the EC containing best
practices
{
on network cost reduction, spectrum authorisation for 5G,
the
{
environmental footprint and environmental impact assessment of
networks as well as electronic magnetic fields (‘EMF’). Member States are
in the process of implementing the toolbox. The objective of this toolbox
is to reduce the cost of broadband deployment in Europe for network
operators while the EC is in the process of revising the Broadband Cost
Reduction Directive (‘BCRD’). The BCRD proposal is expected to be
published in September 2022.
In September 2021, the EC published a legislative proposal for a
Decision
{
of the European Parliament and of the Council establishing
the
{
2030 Policy Programme ‘Path to the Digital Decade’. The proposal
sets ambitious targets to be met by Member States by 2030 on the
following four key pillars: a digitally skilled population and highly skilled
digital professionals; secure and sustainable digital infrastructures (target
is to
{
have all European households connected to gigabit speeds and all
populated areas covered by 5G); digital transformation of businesses; and
digitisation of public services. The European Parliament and Council will
need to endorse the targets through the regular EU legislative procedure.
Furthermore, in February 2022 the EC proposed European digital rights
and principles, covering issues including inclusion, freedom of choice
online, online safety and security, and sustainable digitisation.
Addressing the challenges posed by the COVID-19 pandemic, the
Next
{
Generation EU package is the Union’s means to support the
recovery processes in EU Member States. The bulk of the proposed
recovery measures are funded by a new temporary recovery instrument,
the EU Recovery and Resilience Facility (‘RRF’), worth nearly €750 billion,
which was adopted in December 2020. A significant amount is allocated
towards digital and green initiatives, with a minimum threshold of 20%
of
{
the RRF to be allocated to digital and 37% to green initiatives. As of
31
{
March 2022, the EC had approved the national plans under the RRF
for
{
24
{
EU Member States, of which Czech Republic, Germany, Greece,
Ireland, Italy, Portugal, Romania and Spain are within Vodafone’s footprint.
In March 2022, the European Body of Regulators (‘BEREC’) published a
draft update to the BEREC Guidelines on Net Neutrality, in response to
the
{
recent CJEU rulings on zero-rating practices. BEREC interprets the
rulings to prohibit all price-differentiation practices that are not application
agnostic. This would include Vodafone Pass tariff, which is currently offered
in eight EU markets. Stakeholders had until 14 April 2022 to provide
feedback, and BEREC intends to publish the final Guidelines in
{
June 2022.
Germany
In October 2021, the national regulatory authority (‘BNetzA’) published its
draft regulation regarding the wholesale access markets (so-called Market
3a). In the draft, BNetzA proposes no significant changes in relation to the
regulation of the copper network access but has suggested a light touch
regulation of fibre access (‘FTTH’).
For the first time in Germany, an access regime based on full equivalence
of input (‘EoI’) is intended to enforce the equal treatment of wholesale
demand and Deutsche Telekom’s (‘DT’) retail arm. In addition, BNetzA
proposes improved access to DT’s passive infrastructure (ducts, masts)
with significant market power (‘SMP’) obligations to open DT’s passive
network, including regulated prices for the first time. This would ensure
Vodafone Germany’s wholesale based very high-speed digital subscriber
line (‘VDSL’) business in the future, improve cost effective build out of
Vodafone Germany’s own networks using ducts, and eliminate the risk of
complete deregulation of DT’s fibre networks. The final regulation for the
wholesale access markets is expected by the end of the second quarter
of
{
2022.
Licences for frequency allocations at 800MHz, parts of 1800MHz, and
2600MHz will expire at the end of 2025. Vodafone Germany currently
holds allocations at 800MHz and 2600MHz. BNetzA is therefore assessing
its options on how to proceed on the reallocation of this spectrum. It
may either re-auction the spectrum, or prolong the existing licences, or
a combination of these. BNetzA is currently consulting with stakeholders
on approach and is expected to make a final decision on next steps by
end of 2023 at the latest.
In response to a preliminary reference from the National Court in
Germany, on 2 September 2021, the CJEU issued three judgments
related to zero-rated commercial offers of Vodafone Germany and DT.
The judgements concluded that the specific zero-rated offers that were
the subject of the judgments, and which included an exclusion of roaming
or tethering, or a limitation on the bandwidth for certain categories of
application respectively, were not compliant with the Open Internet
Regulation (‘OIR’). On 27 April 2022, BNetzA consequently issued an
order, announcing that Vodafone Pass is not compliant with OIR, and that
Vodafone Germany must, firstly, stop marketing Pass from 1 July 2022
and must migrate existing Pass customers to alternative tariffs by
31
{
March 2023.
The IT Security Draft Law (‘IT SiG 2.0’), which lays down rules for using
vendors of critical components in critical infrastructure, was adopted in
May 2021. IT SiG 2.0 envisages two pillars to ensure network security
based on, firstly, mandatory certification of critical components and,
secondly, establishing the trustworthiness of the vendors of such
critical
{
components following clearly defined criteria and processes.
To
{
the extent these are not met, there will be the possibility of removing
components from untrustworthy vendors. Components are deemed
critical when they are used for ‘critical functions’, which are defined
by
{
BNetzA in agreement with the Federal Office for Information
Security
{
(‘BSI’).
Italy
In March 2017, the national regulatory authority (‘AGCOM’) imposed a
minimum billing period of one month for fixed and convergent offers,
effective by the end of June 2017. The operators appealed AGCOM’s
resolution before the Administrative Court and the appeal was rejected in
February 2018. Vodafone Italy filed an appeal before the Council of State
and after the public hearing held in July 2020, the Council of State issued
a Preliminary referral to the CJEU in order to assess if AGCOM has the
power to impose minimum and binding billing periods under EU
{
law.
The
{
date for the first hearing has not yet been set.
In January 2020, the national competition authority (‘AGCM’) ruled
that
{
Vodafone Italy, Telecom Italia (‘TIM’), Fastweb and WindTre had
coordinated their commercial strategies relating to the transition from
four-week billing (28 days) to monthly billing, with the maintenance of
an
{
8.6% price increase, in violation of Art.101 of Treaty on the Functioning
of the EU (‘TFEU’). In July 2021, the Administrative Tribunal published its
judgment annulling the AGCM’s decision and fine against Vodafone Italy
for lack of evidence, accepting all of Vodafone Italy’s defensive arguments.
According to the Tribunal, the alleged infringement was in fact the
outcome of the companies’ independent choices to comply with
legislation imposing an obligation to issue customer bills on a monthly
basis. Prior to the Tribunal decision, Vodafone Italy had agreed to pay the
€60 million fine in 15 monthly instalments of €4 million each. Following
the Tribunal decision, Vodafone Italy started the process to be reimbursed
for the two instalments, totalling €8 million, paid so far. The AGCM has
submitted an appeal against the Tribunal decision to the Council of State.
The process is ongoing.
The frequencies in the 2.1GHz band have been renewed until 2029.
Vodafone Italy paid €240 million in April 2021 for the renewal.
In April 2021, AGCOM started a public consultation on the co-investment
commitments presented by TIM in January 2021. On the basis of the
public consultation, AGCOM asked TIM to make some amendments to
the co-investment offer. TIM accepted the amendments and published a
Strategic report
Governance
Financials
Other information
242
Vodafone Group Plc
Annual Report 2022
final version of the co-investment offer on their website in January 2022.
AGCOM is now considering the monitoring activity that will be implemented
on the co-investment offers, but this is still subject to
{
approval.
In accordance with Article 76 of the Code, once a co-investment is
approved, then a national regulatory authority (‘NRA’) may deregulate any
new fibre network developed through the co-investment offer. Therefore,
upon receiving the final co-investment offer, in December 2021, AGCOM
commenced a consultation on its proposed deregulation of any network
rolled out on the basis of the co-investment offer. The consultation
process is ongoing, with a final decision expected by the middle of 2022.
United Kingdom
In March 2021, Vodafone Ltd acquired 40MHz of 3.6GHz spectrum
expiring in
{
2041 for £176 million. Within the negotiation stage of the
auction, Vodafone Ltd and Telefónica agreed to trade spectrum, subject
to regulatory approval, so that Vodafone Ltd’s
{
holdings in the 3.4-3.6GHz
band will be sufficiently proximate to be efficiently used by network
equipment. Regulatory approval was granted in August 2021, and there
will now be a transition period until 2025 as the trade is implemented.
Vodafone Ltd’s total holdings in 3.4-3.6GHz are 90MHz, with fees payable
from 2038.
The 2100MHz band, originally awarded for 3G usage, became liable
to
{
£17 million per annum fees from January 2022, coinciding with
depreciation of the fee paid at auction (the national regulatory authority
(‘Ofcom’) levies annual fees on spectrum after an initial 20-year term).
Ofcom is conducting a review of the UK mobile market, which
commenced in May 2021. It is the first review of its kind, seeking to
review
{
the overall market structure and the ability of the market to
fulfil
{
the investment challenges that lie ahead. It runs alongside the
government’s Wireless Infrastructure Strategy review, which is focused
on
{
future technologies and infrastructure evolution in the sector, with
a
{
particular focus on outcomes in the second half of the decade. Both
projects are expected to conclude in the next 12 months.
Ofcom’s review of Net Neutrality rules is also underway. While the UK is
still committed to high-level open internet alignment under the terms of
the UK/EU trade deal, there is recognition that some reform is needed to
ensure the potential of applications, devices and future technology is not
constrained by the current rules. Ofcom has not published an indicative
timeline for the completion of its review.
In November 2021, the Telecommunications Security Act (‘TSA’) was
passed into legislation. This modified the Communications Act to allow
the Secretary of State to issue High Risk Vendor (‘HRV’) designations that
restrict the usage of named equipment suppliers. In February 2022, a draft
HRV designation relating to Huawei products, which Vodafone Ltd uses
in
{
its radio access network, was issued for consultation. Measures being
consulted on restrict the use of Huawei in the UK’s telecoms networks,
including the removal of Huawei from 5G networks by the end of 2027.
The consultation closed in March 2022. The TSA also allows the Secretary
of State to issue security regulations requiring providers of electronic
communications networks and services to comply with a specified Code
of Practice. In March 2022, the Department for Digital, Culture, Media
and
{
Sport also launched a consultation on the contents of these security
regulations and associated Code of Practice. Ofcom is similarly consulting
on the compliance regime associated with the Code of Practice.
Spain
In February 2020, Vodafone Spain requested that the national regulatory
authority (‘CNMC’) extend and modify the commitments in relation to
the
{
Movistar-DTS merger in 2015 (which were due to end in April 2020).
The CNMC issued a Resolution in July 2020, extending most of the
initial
{
commitments for an additional period of three years, in particular
ensuring access to Movistar Estrenos and Movistar Series channels.
The
{
Resolution also removed the commitment that limited the terms
(exclusivity, validity period and period of exploitation) in which Telefónica
could acquire subscription video on demand content. Vodafone Spain has
appealed this removal.
In November 2021, the government initiated the parliamentary process
to approve the new Audiovisual Communication Bill Project. The most
relevant changes are: (i) amending RTVE Financing law, to eliminate the
requirement on MNOs to contribute 0.9% telco revenues to the public
corporation RTVE; and (ii) including over-the-top service providers in
the
{
requirement to provide 1.5% audiovisual revenue to RTVE. The text
will now begin its parliamentary process, where a long-lasting debate is
expected due to political divergences. Final approval is expected in the
first half of 2022.
In October 2021, the CNMC has approved the regulation of the
wholesale
{
markets for broadband access (Market 3a and 3b). In particular,
it expanded the geographic areas where CNMC requires Telefónica to
maintain access obligations for ducts and poles and copper local loop
unbundling. In addition, the CNMC brought forward the date by which
Telefónica must close its copper exchanges. This will lead to an expedited
obligation on Vodafone Spain to remove its collocated equipment from
these exchanges.
In April 2021, the government approved a Royal Decree-Law amending
the General Telecommunications Act. The amendments increase the
duration of spectrum band concessions to a minimum of 20 years and
allow for the possibility to extend this initial period, from a minimum of
five
{
and maximum of 20 years. The amendments also make it possible to
extend existing concessions by 20 years, but only upon specific approval
by the Ministry.
In November 2021, the government initiated the parliamentary process
to approve the new Telecommunications Bill. The most relevant points
included in the draft Bill presented to the Congress by the government
are: (i) the possibility of renewal of spectrum licences for all bands that
are
{
already assigned, (ii) the possibility of extending contracts for the
same duration as the initial period (up to 24 months) and (iii) no specific
obligations on OTTs to register as public electronic communications
service providers, in line with the Code. The text was submitted to
Congress to start its parliamentary process for final approval, expected
in
{
the second quarter of 2022.
In February 2022, the Ministry for Economy and Enterprise
approved
{
a
{
Ministerial Decree that regulates the reassignment
of
{
the
{
frequencies in
{
the existing 3.4-3.8GHz concessions. This
reassignment
{
is a consequence of the granting of two new concessions
in
{
2021. The Ministerial Decree foresees a six-month period in which
the
{
four operators holding concessions, Vodafone Spain included,
must
{
carry out a coordinated migration of the frequencies according
to
{
its
{
new organisation.
In July 2021, the spectrum auction for the 700MHz band took place.
Vodafone Spain, Orange and Telefónica each won spectrum, with
2x10MHz each. Vodafone Spain paid €350 million. The concessions
were
{
formalised by the Ministry for Economy and Enterprise in
December
{
2021, and the operators began the deployment of new
700MHz radio stations network in January 2022.
In November 2021, the government published the draft Bill regulating
customer service for consumers, which will introduce new requirements
around the provision of customer care and managing customer
complaints, and compensation. It is anticipated that the Bill will be
approved in the first quarter of 2023.
In November 2021, the government approved the modification of the
Consumer Law in order to incorporate the Directive (EU) 2019/2161
as
{
regards to better enforcement and modernisation of EU consumer
protection rules. This new regulation will enter into force on 28 May 2022.
In December 2021, the National State Budget 2022 was approved. The
law sets a reduction of spectrum fees for a temporary period of two years,
which will result in €11.2 million savings for Vodafone Spain.
Regulation (continued)
Strategic report
Governance
Financials
Other information
243
Vodafone Group Plc
Annual Report 2022
In January 2022, the government launched a consultation for all
stakeholders regarding the upcoming auction on the 26GHz band
(24.25
{
– 27.50GHz), to assess demand and technical readiness.
Vodafone
{
Spain responded to the consultation in January 2022. The
auction is expected to take place during the fourth quarter of 2022.
In June 2021, the CNMC approved the merger between M
¼
sMóvil and
Euskaltel on grounds that the transaction does not significantly alter the
competitive situation. The Ministerial Council and Spain’s financial markets
regulator (‘CNMV’) have now also approved the proposed takeover. A few
months later, in March 2022, Orange and the newly merged M
¼
sMóvil
announced the start of negotiations to merge their operations in Spain.
The transaction is expected to be signed in the second quarter of 2022,
and should be completed by the second quarter of 2023, once the
appropriate approvals are obtained from the relevant administrative,
competition and regulatory authorities.
In March 2022, the government adopted a decision, which requires
the
{
Parliament to ratify the Royal Decree-Law on Cybersecurity
(‘Cybersecurity Law’) by the end of April 2022. The Cybersecurity Law
introduces the concept of high-risk suppliers (‘HRS’) and creates a new
framework: (i) for identifying HRS; (ii) limiting the use of HRS in both the
Core and the Access networks, including the introduction of timeframes
for the removal of HRS from the core and parts of the access network;
and (ii)
{
for 5G operators to develop a risk assessment on their networks,
and a
{
vendor diversification strategy.
Ireland
In April 2019, the national regulatory authority (‘ComReg’) published its
final decision on Universal Service funding applications by Eircom Ltd
(‘eir’) for 2010 to 2015. ComReg found that the net cost of the Universal
Service Obligation (‘USO’) did not represent an unfair burden on eir.
Subsequently, eir has challenged this decision. The proceedings are
ongoing, and Vodafone Ireland is a notice party to these proceedings.
In May 2019, ComReg initiated a review of the regulated Weighted
Average Cost of Capital (‘WACC’). In its draft decision notified to the
EC
{
in
{
June 2020, ComReg proposed the regulated fixed WACC should
fall
{
from 8.18% to 5.61%. It was subject to annual review in June
{
2021
and
{
fell further to 5.56%. ComReg issued its final decision on the Access
Network Cost Model, incorporating the reduced WACC in December 2021
with prices effective from 1 March 2022. This decision has been challenged
by eir which also sought a stay on pricing changes pending appeal. This
was not granted, and undertakings have been provided to the court by
Vodafone Ireland and Sky.
In December 2020, ComReg published its decision to proceed with
the
{
Multi-Band Spectrum Auction. In late January 2021, Three Ireland
(Hutchison) Ltd and Three Ireland Services (Hutchison) Ltd (collectively
‘Three’) lodged an
{
appeal to the decision. The proceedings commenced
in June
{
2021 and remain ongoing. ComReg and the Irish government
have continued to extend the Temporary Spectrum Measures on
700MHz and 2.1GHz spectrum. The measures are now expected
to
{
extend to 1 October 2022.
Portugal
In October 2021, the main bidding stage of 5G auction ended with
Vodafone Portugal acquiring 2x10MHz of 700MHz and 90MHz of
3.6GHz.
{
Rights of Use were issued in November and December 2021.
With respect to the auction conditions, Vodafone Portugal began a
legal
{
action against the national regulatory authority (‘ANACOM’) in
November 2020, with respect to aspects of the auction conditions,
including discriminatory measures between new entrants and mobile
network operators (‘MNOs’). The Court rejected Vodafone Portugal’s
claims in November 2021, and the Rights of Use were issued. However,
since the conclusion of the auction, Vodafone Portugal has submitted a
court action against ANACOM in relation to the Rights of Use issued and
associated obligations. Legal proceedings are ongoing and there is no
expected date of conclusion.
In June 2019, Vodafone Portugal began a legal action against ANACOM
seeking the revocation of Dense Air’s spectrum licence under the ‘use it
or
{
lose it’ principle. The legal proceedings are ongoing, with Vodafone
Portugal’s latest proceeding, regarding the restrictive impact of Dense
Air’s spectrum on Portugal’s 5G auction, being rejected by the Court in
June 2021. In July 2021, Vodafone Portugal appealed the rejection to
the
{
Administrative Central Court, and the outcome is pending.
In July 2020, the national competition authority (‘AdC’) sent Vodafone
Portugal and three other national operators a Statement of Objections (‘SO’)
alleging that operators formed a cartel to limit competition in telecoms
services advertising via the Google search engine. In October 2020,
Vodafone Portugal responded to the SO and proceedings are
ongoing.
{
Vodafone Portugal has also filed motions and appeals with
different authorities regarding procedural irregularities and invalidity
of
{
evidence
{
collected during the December 2018 raid at Vodafone
Portugal’s premises. In December 2020, a Court decision declared email
evidence collected at Vodafone Portugal’s premises to be inadmissible.
The decision was appealed by the AdC and the public prosecutor,
and
{
appeals are still pending.
Vodafone Portugal continues to challenge payment notices totalling
€34.8 million issued by ANACOM regarding 2012-2014 extraordinary
compensation of Universal Service net costs.
In July 2021, the Portuguese government approved a Decree-Law that
establishes a social tariff for broadband internet access (‘IST’), which will
benefit consumers with low income or with special social needs. Although
the Code (which is meant to define the scope of the Universal Service
going forward) has not yet been transposed into national law, the IST
is
{
qualified by this Decree-Law as Universal Service and all operators
are
{
required to provide it under the terms that were defined by the
government in November 2021. Vodafone Portugal made the IST
offer
{
available on 4 March 2022.
In December 2021, the AdC issued a SO against Vodafone Portugal
and
{
two other national operators (MEO and NOS) and Accenture
with
{
respect to an alleged anti-competitive agreement in the pay TV
recordings advertising market and in the market for the provision of pay
TV services (due to the introduction of pre-roll advertisings on pay TV
set
{
top boxes’ recordings of the three operators). Vodafone Portugal
submitted a written defence and evidence in support of its case in March
2022. Vodafone Portugal has also filed an appeal regarding procedural
irregularities and invalidity of evidence collected during the October 2021
dawn raid at Accenture’s premises. Procedures are ongoing.
In July 2021, ANACOM approved the renewal of Vodafone Portugal and
MEO’s rights of use for 900MHz (2x5MHz) and 1800MHz (2x6MHz) until
2033. Although no upfront payment was required, additional coverage
obligations were set. For Vodafone Portugal, 44 out of 100 parishes must
have 90% of coverage of the population with 100Mbps in one years’ time,
starting from when ANACOM approves split of parishes amongst MEO and
Vodafone Portugal. Operators must reach an agreement by June 2022.
Romania
The 5G Security Law was adopted in June 2021. The law gives operators
five years to remove high risk vendors from their networks, and
{
replace
their equipment with that of authorised vendors for core network, and
seven years for radio access networks related to 5G. The authorisation of
a vendor is granted by the Supreme Council for National Defence where
there is no evidence of identified risks, threats and vulnerabilities to
national security and defence.
The 5G spectrum auction for 700MHz and 3.5GHz has been delayed
until
{
the adoption of the Code. Only short-term, available and existing
spectrum in 800MHz, 2600MHz FDD and TDD, and 3.5GHz frequency
bands have been auctioned in November 2021.
The enforcement of the Code is subject to the final decision of the
Constitutional Court, with a resolution expected in May 2022.
Strategic report
Governance
Financials
Other information
244
Vodafone Group Plc
Annual Report 2022
Greece
In September 2021, the Greek government announced the reform
of
{
the
{
‘special mobile tax’, which was previously charged at between
12
{
and
{
20% of the mobile tariff, (and VAT of 24% was applied on
top
{
of
{
this).
{
Effective from January 2022, this ‘special mobile tax’ was
abolished
{
for
{
subscribers aged up to 29 years, and reduced to 10%
for
{
all
{
other
{
subscribers.
Following the publication of the 5G Auction Tender document,
a
{
petition
{
by Greek residents for its annulment, as well as for any
future
{
administrative acts, was filed before the Council of the State
on
{
the
{
grounds it infringed environmental protection provisions. The
hearing
{
was held in January 2022 and the decision is still pending.
The national regulatory authority’s (‘EETT’) decision in relation to Wind’s
complaint against Vodafone Greece and Cosmote alleging abuse of
dominance in relation to calls to mobile networks in Albania is pending.
Vodafone Greece appealed EETT’s decision on the mobile virtual network
operator (‘MVNO’) access dispute
{
resolution between Vodafone Greece
and Nova (ex-Forthnet). Vodafone Greece withdrew from the application
of annulment, as Nova requested the termination of its MVNO contract
in
{
view of expected future synergies with Wind following the latter’s
acquisition by Nova’s parent company, United Group.
The development of a margin squeeze test model based on non-
discrimination obligation for OTE’s retail plans is currently still pending.
Operators have provided their comments on the model, and these
have
{
been assessed by EETT. However, the delays in the approval of the
new model enabled the incumbent to announce free of charge speed
upgrades which the NRA approved under the outdated existing model.
Vodafone Greece is challenging the incumbent’s new offers.
EETT published a decision on the USO net cost for the period 2012-2016
of total amount €36.8 million for all operators, with Vodafone Greece’s
share being about €7.75 million, payable in five annual instalments. In
December 2021, Vodafone Greece filed a petition for the annulment of
the NRA’s decision before the Administrative Court of
{
Appeal. The hearing
is scheduled for June 2022.
Vodafone Greece continues its appeal against EETT decisions from
2018,
{
which declared that Vodafone Greece was obliged to pay a
total
{
of
{
€9 million to OTE, in consideration of the Universal Services it
provided
{
in Greece during the years 2010 and 2011. As part of its appeal,
in December 2021 Vodafone Greece raised additional arguments with
the
{
Council of State against the EETT’s decisions on the Universal Service
Net Cost for the years 2010-11. The hearings are scheduled for May 2022
(for costs for year 2010) and June 2022 (for costs for year 2011).
Czech Republic
In August 2019, the EC sent a statement of objections to O2 Czech
Republic, CETIN and T-Mobile Czech Republic with respect to the
competition concerns in relation to the parties’ network sharing
agreement. Following commitments offered by the parties in respect
of
{
the agreement, on 1 October 2021 the EC announced it was seeking
stakeholder feedback on these commitments. A final decision on
commitments is expected during the second quarter of 2022.
Vodafone Czech Republic filed a complaint to the EC, regarding Czech
Republic’s 5G spectrum auction, arguing that the auction terms set by
the
{
Czech national regulatory authority (‘CTU’) infringed EU law. The EC
dismissed the complaint, and the case is now closed.
The re-farming of 3.4-3.8GHz spectrum was completed in September 2021,
to provide contiguous spectrum to each spectrum holder in this band.
Vodafone Czech Republic has 60MHz.
In September 2021, CTU published a draft market analysis of the mobile
wholesale access market for comments. The CTU has proposed in its
consultation to impose regulation on the wholesale price for mobile
voice,
{
SMS, and data. The consultation period ended on 25 October 2021
and CTU notified the draft measure to the EC in November 2021. On
17
{
February 2022, the EC issued its decision requesting CTU to withdraw
its notified proposals. The EC stated in its decision that the three criteria
test was not met, and ex ante regulation based on the joint SMP finding
was unjustified.
In October 2021, CTU published a proposal to deregulate the wholesale
central access provided at a fixed location for mass-market products and
significantly reduce the scope of regulation on the market of wholesale
local access provided at a fixed location. CTU is expected to notify the
proposals to the EC during 2022.
Hungary
In January 2021, the national regulatory authority (‘NMHH’) published its
market analysis decision for wholesale voice call termination on individual
mobile networks. Later, in June 2021, NMHH published its decision to
maintain obligations regarding transparency, equal treatment, access
and
{
interconnection, while the accounting separation obligation was
withdrawn. The mobile termination rate from 1 January 2022 was set
at
{
HUF 1.67 per minute. Magyar Telekom (‘Telekom’) requested a review
of both the market analysis and the obligations in court. In March 2022,
the court rejected Telekom’s application for SMP designation. Telekom
withdrew its application against the decision imposing the obligation.
The
{
case is now closed.
In July 2021, NMHH launched a sectoral inquiry on SMS termination
service and retail bulk SMS service, based on a concern raised by the
Hungarian Competition Office (‘HCO’). HCO has indicated their view that
mobile service providers (including Vodafone Hungary) in Hungary may
have a uniform pricing practice for SMS termination and bulk SMS. The
sectoral inquiry does not have a statutory deadline, and the procedure
is
{
still ongoing, but it is expected to conclude during the second quarter
of
{
2022.
In September 2021, NMHH published an examination of the justification
for maintaining the national domestic directory inquiry service as a
Universal Service. The NMHH final decision is to maintain this as a
Universal Service, and Magyar Telekom was appointed as national
Universal Service operator. The NMHH however decided not to
maintain
{
the provision of a printed phone book as a Universal Service.
The HCO’s investigation into the network and spectrum sharing and
possible collusion in the previous spectrum tender by Magyar Telekom
and Yettel (formerly Telenor) is ongoing.
In December 2021, HCO closed its sectoral inquiry in audio-visual
broadcasting and distribution markets.
Regulation (continued)
Strategic report
Governance
Financials
Other information
245
Vodafone Group Plc
Annual Report 2022
Albania
In December 2021, 4iG entered into a purchase agreement with
ALBtelecom to acquire 80.27% of its shares and the transaction was
approved by the Albanian Competition Authority (‘AK’), who concluded
their investigation with no findings at the end of January 2022, allowing
the transaction to go forward. Shortly after the ALBtelecom acquisition, in
January 2021, 4iG notified the AK of their transaction to acquire 100% of
ONE Telecommunications, the second largest mobile operator in Albania.
AK decided to open an in-depth investigation into potential creation of
horizontal/vertical concentration of the market. The investigation was
closed in March 2022, with the approval of the transaction but subject
to
{
a number of remedies.
From July 2021, roaming surcharge rates have been removed in
the
{
‘West
{
Balkan 6’ (‘WB6’) countries (Albania, Kosovo, Montenegro,
Macedonia, Serbia, Bosnia). From these dates, users can RLAH across the
WB6 markets. It is possible for operators to implement a Fair Usage Policy
for data consumption in order to protect the operator from abusive usage.
The national regulatory authority (‘AKEP’) is planning an auction for all
bands (3.5MHz, 26GHz, 700MHz). AKEP instructed a consultancy to
prepare a 5G Strategy document, to evaluate and recommend details
with respect to the auction process and outcomes, and on the freeing
up
{
of the 700MHz band. The public consultation on this document
closed
{
in December 2021 and is in the process of being approved
by
{
AKEP. It is expected that the 5G auction will take place in 2023.
The Ministry of Infrastructure and Energy (‘MIE’) has started the
process
{
for the transposition of the Code into Albanian legislation with
the
{
support
{
of an external consultant. The aim is to fully align Albanian
telecommunication legislation with the same standards and rules applied
in the EU as a requirement of Chapter 10 ‘Information society & Media’
of
{
the Integration package for the accession of Albania in the EU.
African, Middle East
Vodacom: South Africa
In March 2021, the national regulatory authority (‘ICASA’) published a
findings document on its market inquiry into mobile broadband services.
ICASA found insufficient competition and designated Vodacom South
Africa (‘Vodacom SA’) as having SMP in several relevant markets at
wholesale (site access, national roaming) and retail levels, proposing
remedies primarily at the wholesale level. ICASA published the Draft
Regulations for comment and held public hearings in August 2021.
On
{
31
{
March 2022, ICASA published the final regulations and reasons
document, bringing this process to a conclusion.
On 8 March 2022, the spectrum auction commenced in South Africa,
which involved an opt-in round for qualifying (non-Tier 1 operators)
bidders. The main auction for all the applicants began on 10 March 2022
and concluded on 17 March 2022. Vodacom SA secured 110MHz of
spectrum comprising two blocks of 2x5MHz in the 700MHz spectrum
band, 80MHz in 2600MHz spectrum band, and 10MHz in 3500MHz
spectrum band.
On 8 September 2021, e.TV commenced a motion with respect to ICASA
and the Minister of Communications and Digital Technologies, with a view
to delaying the digital migration process. The motion was heard by the
High Court in March 2022, with Vodacom SA intervening to support
the
{
Minister and ICASA. The High Court dismissed e.TV’s application,
but
{
also
{
deferred the analogue switch off date from 30 March 2022
to
{
30
{
June
{
2022. e.TV has indicated it will appeal against the judgment.
On 11 March 2022, the Minister of Communications and Digital
Technologies published proposed amendments to the Policy for
High
{
Demand Spectrum and Policy direction for comment, specifically
on
{
the licensing of the Wholesale Open Access Network (‘WOAN’).
Under
{
the proposals, the WOAN is removed as the means to achieve a
number of policy objectives i.e. increased service based competition, and
empowerment and instead, the policy objectives will be realised using the
next generation Radio Frequency Spectrum policy which is currently
being drafted for consultation.
In May 2021, ICASA published a notice announcing the start of the Review
of the Pro-competitive Conditions imposed on relevant licensees in terms of
the Call Termination Regulations, to be completed by March 2022. ICASA
has now completed the review and published its findings document. This
will be followed by cost modelling, to be completed by August 2022, and
final regulations, to be published by September 2022.
Vodacom: Democratic Republic of the Congo
In August 2018, the Customs Authority issued a draft infringement report
assessing that there were unpaid duties for alleged smuggled devices
bought by Vodacom Democratic Republic of the Congo (‘Vodacom DRC’)
which amounted to US$44 million, to which Vodacom DRC objected. In
May 2019, Vodacom DRC filed an administrative appeal at the Council of
State, which is still pending.
In April 2020, a new Decree introduced a Central Equipment
Register
{
System (‘CEIR’) and handset certification fees (‘RAM tax’).
In
{
November 2020, Vodacom DRC was fined US$2.5 million by way
of
{
a
{
Ministerial Decree for
{
alleged shortcomings in its cooperation and
implementation of charging mechanisms related to the CEIR system.
Vodacom DRC appealed this decision, and requested a suspension of the
Decree, but this remains pending. Subsequently, the Council of Ministers
repealed the Decree, effective 1 March 2022. Consequently, the national
regulatory authority (‘ARPTC’) directed all operators to remove systems
implemented for collecting the RAM tax.
In March 2022, ARPTC sent letters to Vodacom DRC and other mobile
network operators stating that in light of cancellation of the RAM tax,
ARPTC requests submission of Vodacom DRC’s know-your-customer
(‘KYC’) databases within 72 hours. It remains unclear as to how ARPTC’s
request is related to the RAM tax. The industry has requested a meeting
with ARPTC to discuss and clarify this request.
In January 2021, Vodacom DRC received notice by the Minister of
Communications, stating that a December 2020 investigation found
{
non-
compliant SIM cards without providing further details. Vodacom DRC sent
a letter requesting further information on the details of the investigation.
While awaiting a response to its letter in February 2021, Vodacom DRC
was fined US$3.65 million by way of a Ministerial Decree for alleged
non-compliance. Vodacom DRC initiated legal action and appealed for
a
{
stay of the execution of the fine for the duration of the appeal, which
was granted. In December 2021, ARPTC eventually submitted a letter
identifying seven non-compliant SIMs as being the reason for the
fine.
{
Vodacom DRC will challenge the findings as part of the ongoing
legal
{
action.
On 12 October 2021, the new Communications Act was published (‘the
Act’), and is effective from that date, repealing the old Communications
Act of 2002. Vodacom DRC and all mobile network operators are
to
{
convert their licences to the new regime within 12 months of its
publication, at no cost. The licence conversion process is subject to
further publication of applicable decrees and implementation measures
of the new Act, which is still pending.
Vodacom: Tanzania
In February 2020, the national regulatory authority (‘TCRA’) issued new
SIM Card Registration Regulations to formalise the ‘biometric only’ SIM
registration requirement and restrict ownership of the number of SIMs by
customers. Since April 2021, Vodacom Tanzania has barred 568,000 SIMs
of subscribers who have not completed biometric registration.
In December 2021, the TCRA issued its quarterly report on Quality
of
{
Service (‘QoS’), in which Vodacom Tanzania has
{
been found
non-compliant with several targets under the QoS regulations. As a
consequence, Vodacom Tanzania is executing network improvement
plans. There is a risk of fines for non-compliance.
Strategic report
Governance
Financials
Other information
246
Vodafone Group Plc
Annual Report 2022
The Finance Act of 2021 was passed by Parliament effective 1 July 2021.
The Finance Act amendments introduced a ‘Mobile Money Levy’, which
is
{
a levy to be charged on mobile money transfer transactions, at a rate
ranging from TZS10 to 10,000. The levy charged on mobile money
transactions started in July 2021. In September 2021, the Regulator
issued amended
{
Regulations with immediate effect: (i) Reducing levy
charges by 30%, and (ii) Revising the definition of
{
’Transfer
{
and
Withdrawal’, to include mobile banking services and exclude transfers
from a bank account to a mobile money account. The Finance Act also
introduces an ‘Airtime Levy’, which is a levy to be charged on airtime, at a
rate ranging from TZS5 to 223.
Vodacom: Mozambique
The Communications Regulator (‘INCM’) assigned Vodacom Mozambique
temporary spectrum (2x5MHz of 1800 band). This was assigned under
a
{
COVID-19 relief programme as a temporary licence. The INCM has
subsequently demanded return of the temporary spectrum. Vodacom
Mozambique has entered discussions with INCM to potentially acquire
this spectrum as a permanent licence.
Vodacom: Lesotho
In December 2019, the Lesotho Communications Authority (‘LCA’) issued
a notice of enforcement against Vodacom Lesotho based on its assertion
that the company’s statutory external auditors were not independent,
as
{
required by the Companies Act. In September 2020, the LCA issued
a
{
penalty of M134 million against Vodacom Lesotho. Despite Vodacom
Lesotho reserving its rights for appeal within the statuary timeframe,
in
{
October 2020 the LCA issued a notice of revocation of the operating
licence of Vodacom Lesotho for failure to pay a penalty of M134 million.
Thirty percent of this fine was determined by the LCA to be payable in
October 2020 and the balance was suspended for a period of five years,
on the condition that Vodacom Lesotho is not found guilty of breaching
any of its regulatory obligations in the future. Vodacom Lesotho
has
{
launched an application in the Lesotho High Court to have both
determinations of the LCA imposing the fine and revoking its operating
licence, respectively, reviewed and set aside. The Lesotho High Court
has,
{
in the meantime, issued an order interdicting the LCA from, inter
alia,
{
enforcing the payment of the said fine and revoking Vodacom
Lesotho’s operating licence. The Lesotho High Court heard the matter
in
{
December
{
2020, and Vodacom Lesotho is awaiting judgment.
In June 2021, the Minister of Communications issued new SIM and
Device
{
Registration Regulations without prior consultations. The
Regulations included a requirement for biometric registration and
penalties for non-compliance. Subsequently, the Parliament directed
the
{
LCA to withdraw the Regulations to allow for a comprehensive public
stakeholder consultation prior to promulgating regulations. The LCA
initiated the consultation process which closed on 30 September 2021.
Vodacom Lesotho made submissions through the consultation process.
On 24 December 2021, the Minister of Communications (‘MoC’) promulgated
a revised version of the Communications (SIM Registration) Regulations
of
{
2021. The new regulations come into effect as of 24 June 2022 and
allow service providers 12 months to meet compliance in respect of
existing SIMs. The LCA and/or MoC have powers to extend the
compliance timelines.
In August 2021, Vodacom Lesotho received approval for the renewal of
its 3500MHz trial 5G spectrum (1x100MHz) for a further six-month period
expiring 31 March 2022. Vodacom Lesotho commenced its 5G trial in
November 2021 and is engaging the LCA to convert the trial licence to
a
{
permanent licence.
Turkey
Since October 2021, a margin squeeze test has been applicable on
reference offers. The national regulatory authority (‘ICTA’) is expected
to
{
review and approve T
×
rk Telekom’s Reference Offer to establish fibre
access model and tariffs as well as to redefine wholesale SLAs. According
to ICTA’s 2022 Business Plan, the deadline for completing this review is
December 2022, although it is anticipated that this will occur sooner.
In September 2019, the Local Court annulled the administrative penalty
at the amount of TRL138 million imposed by the Ministry of Trade on
Vodafone Turkey, due to the statute of limitation of the investigation
period stated in law. Vodafone Turkey entered into a reconciliation
procedure with the Ministry of Trade, to reach an agreement to conclude
the judicial process, under which Vodafone Turkey has been granted a
remission of the TRL138 fine, and in turn Vodafone Turkey has released
the right of litigation.
Egypt
In September 2020, Vodafone Egypt submitted its proposal to acquire
40MHz in response to the national regulatory authority (‘NTRA’) issuance
of a bid for spectrum acquisition in the 2600MHz band. In December
2020, Vodafone Egypt’s technical and financial proposal was accepted,
and a new License Annex was signed between NTRA and Vodafone Egypt
after payment of US$270 million and the remaining 50% to be paid over
two
{
years in two equal instalments. Vodafone Egypt has now received
the
{
full spectrum bandwidth of 40MHz in the 2600MHz band over two
tranches (1st in November 2021 and 2nd in January 2022). The 40MHz
are now operational across the network and deployment is progressing.
Ghana
Vodafone Ghana is involved in an ongoing legal dispute over a
parcel
{
of
{
land. The plaintiff contends that, due to irregularities in the
documentation, he is due US$16 million in compensation. Vodafone
Ghana continues to appeal the claim, which is now sitting with the
Supreme Court. The next hearing is due by the end of April 2022.
In January 2020, Vodafone Ghana successfully renewed its 900MHz
and
{
1800MHz licences for 10 years, until 2029, pending payment of
US$25
{
million. Vodafone Ghana entered negotiations with the Ministry
of
{
Communications and Digitalisation (‘MoCD’) and Ministry of Finance to
amend the terms of renewal in relation to increasing duration of licence,
payment terms, re-farming rights, and additional 800MHz spectrum,
which continue. The MoCD extended the payment deadline date to
31
{
December 2021.
The NRA assigned 2x5MHz of 800MHz frequency band on a temporary
basis until June 2021 as part of COVID-19 measures. Use of the temporary
spectrum was further extended until 31 December 2021. Currently
Vodafone Ghana has successfully temporarily extended the use of the
spectrum with the support of the MoCD until discussions for 2G licence
renewal are concluded.
In October 2021, SIM card re-registration commenced for a period
of
{
three
{
months. All SIM cards are expected to be registered with
the
{
Ghana Card (biometric national identification card) issued by the
National
{
Identification Authority (‘NIA’), the regulator for identification
in
{
Ghana. Due to insufficient registrations, the MoCD extended the
deadline for registration from 31 March 2022 to 30 July 2022.
Regulation (continued)
Strategic report
Governance
Financials
Other information
247
Vodafone Group Plc
Annual Report 2022
Overview of spectrum licences at 31 March 2022
700MHz
800MHz
900MHz
1400/1500MHz
1800MHz
2.1GHz
2.6GHz
3.5GHz
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Germany
2x10 (2033)
2x10 (2025)
2x10 (2033)
20 (2033)
2x25 (2033)
2x15
2
(2040)
2x20+25 (2025)
90 (2040)
2x5
2
(2025)
Italy
2x10 (2037)
2x10 (2029)
2x10 (2029)
20 (2029)
2x15 (2029)
2x15 (2029)
2x15 (2029)
80 (2037)
2x5
3
(2029)
UK
4
n/a
2x10 (2033)
2x17.4
20 (2023)
2x5.8
2x14.8
2x20+25 (2033)
50 (2038)
40 (2041)
5
Spain
2X10 (2041)
6
2x10 (2031)
2x10 (2028)
n/a
2x20 (2030)
2x15+5 (2030)
2x20+20 (2030)
90 (2038)
Ireland
n/a
7
2x10 (2030)
2x10 (2030)
n/a
2x25 (2030)
2x15 (2022)
n/a
105
8
(2032)
Portugal
2X10 (2041)
2x10 (2027)
2x5 (2033)
n/a
2x6 (2033)
2x20 (2033)
2x20+25 (2027)
90 MHz (2041)
2x5
3
(2027)
2x14
3
(2027)
Romania
n/a
2x10 (2029)
2x10 (2029)
n/a
2x30 (2029)
2x15 (2031)
n/a
9
40 (2025)
Greece
2x10(2036)
2x10 (2030)
2x15 (2027)
n/a
2x10 (2027)
2x20 (2036)
2x20+20 (2030)
140 (2035)
2x15
3
(2035)
Czechia
2x10 (2036)
2x10 (2029)
2x10 (2029)
n/a
2x27 (2029)
2x20 (2025)
2x20 (2029)
60 (2032)
Hungary
2x10 (2035)
10
2x10 (2029)
2x10 (2022)
n/a
2x15 (2022)
2x15 (2027)
2x20+25 (2029)
60 (2034)
2x1
3
(2029)
2x20(2037)
10
2x5
3
(2035)
10
50
3
(2035)
10
2x9 (2037)
10
Albania
n/a
2x10 (2034)
2x8 (2031)
n/a
2x9 (2031)
2x15+5 (2025)
2x20+20 (2030)
n/a
2x2
3
(2030)
2x14
3
(2030)
2x5
3
(2029)
2x4
3
(2024)
11
2x5
3
(2024)
11
2x5
3
(2031)
11
Vodacom
South Africa
12
2x10
n/a
2x11
13
n/a
2x12
2x15
13
80
10
Vodacom:
Democratic
Republic of
the Congo
n/a
2x10 (2038)
2x6 (2038)
n/a
2x18 (2038)
2x10+15
(2032)
n/a
2x15 (2026)
Lesotho
n/a 2x20
14
2x22
14
n/a
2x30
14
2x20
14
n/a
2x21
14
(2036)
79 (Trial)
Mozambique
n/a
2x10 (2039)
2x8 (2039)
n/a
2x20(2039)
2x15+5 (2039)
n/a
100
15
(2024)
2x5
3
(2022)
Tanzania
2x10 (2033)
n/a
2x12.5 (2031)
n/a
2x10 (2031)
2x15 (2031)
n/a
2x7+2x14 (2031)
Turkey
n/a
2x10 (2029)
2x11 (2023)
n/a
2x10 (2029)
2x15+5 (2029)
2x15+10 (2029)
n/a
2x1.4
3
(2029)
Egypt
n/a
n/a
2x12.5 (2031)
n/a
2x10 (2031)
2x20 (2031)
40 (2031)
16
n/a
Ghana
n/a
2x15
17
(2034)
2x8
18
(2034)
n/a
2x10
18
(2034)
2x15
17
(2023)
n/a
n/a
Notes:
1.
ALL – Single (or unpaired) blocks of spectrum are used for asymmetric data (non-voice) use; block quantity has been rounded to the nearest whole number.
2.
GERMANY – The allocation of 2.1GHz will change to the following: in January 2021 will have 2x15MHz (2040) and 2x5 (2025); in January 2026 will have 2x20MHz (2040).
3.
MULTIPLE – Blocks within the same spectrum band but with different licence expiry dates are separately identified.
4.
UK – all UK spectrum licences are perpetual so any dates given are the ones from which licence fees become payable, and where no date is given this means that licence fees already apply.
5.
UK – Currently in the transition period of the 3.4-3.8GHz defragmentation deal with VMO2. Once the transition is completed i
n 2025, Vodafone will have 90 MHz with an expiry date of 2038.
6.
SPAIN – The initial term of the licence is 20 years, with the option to renew the licence for an additional 20 years as long as the licence conditions have been met.
7.
IRELAND – In Ireland a temporary licensing framework for spectrum rights of use on the 700MHz band has been established allowing the use 2X10 MHz. The licence is granted for a 3-month block commencing
1
{
April
{
2022 and a further application is then required for an extension from 1 July 2022. The licence granted under regulations shall
expire no later than 1 October 2022.
8.
IRELAND – 105MHz in cities, 85MHz in regions.
9.
ROMANIA – 2.6GHz TDD spectrum was returned to the regulator, effective July 2021.
10.
HUNGARY – In Hungary 700MHz, 2.1GHz and 3.5GHz – conditional options of a further five-year extension to 2040; 900MHz, 1.8G
Hz – the 15-year right of use began April 8th 2022 when original licences expired;
conditional options of a further five-year extension to 2042.
11.
ALBANIA – spectrum acquired from PLUS’ exit from market.
12.
SOUTH AFRICA – Vodacom’s South African spectrum licences are renewed annually. As part of the migration to a new licensing regime the national regulator has issued Vodacom a service licence and a
{
network licence
which will permit Vodacom to offer mobile and fixed services. The service and network licences have a 20-year duration and will expire in 2029. Vodacom South Africa was assigned Provisional spectrum in November
2021 when the Temporary Spectrum regime came to an end. The provisional spectrum assignments expire on 30 June 2022, after which the new permanent post-auction assignments will become effective (values in
table correspond to permanent assignments as per the outcome of the 2022 auction).
13.
SOUTH AFRICA – South African Regulator has indicated that it has approved Vodacom’s 2100MHz licence amendment which effectively returns the 2100TDD spectrum. Surrender of 2X1MHz in 900MHz due to band
harmonisation imminent.
14.
LESOTHO – Vodacom’s Lesotho spectrum licences are attached to a unified services licence and renewed annually. 1x79MHz of 3.5GHz has been licenced on a temporary basis and is pending renewal.
15.
MOZAMBIQUE – Mozambique 3.5GHz spectrum for 5G trial which was extended to 2024. 2x5 of 2.1GHz has been acquired on a 3-yea
r lease which has expired in November 2021 and is pending renewal.
16.
EGYPT – The first tranche of 20MHz of 2.6GHz was made available In November 2021 and the second tranche of 20MHz was receiv
ed in January 2022.
17.
GHANA – NCA submitted a provisional licence for comments, to which Vodafone Ghana submitted feedback and final licence beyo
nd 2023 is pending.
18.
GHANA – Vodafone Ghana has established an agreement with the MoF to renew its license for 15 years along with the permanent
assignment of an additional 2x5 800MHz. The agreement is pending written finalisation.
Strategic report
Governance
Financials
Other information
248
Vodafone Group Plc
Annual Report 2022
MTR Rates
Country by region
2019
1
2020
1
2021
1
2022
1
Europe
Germany (€ cents)
0.95
0.90
0.78
0.55
Italy (€ cents)
0.90
0.76
0.67
0.55
UK (GB£ pence)
0.489
0.479
0.468
0.391
Spain (€ cents)
0.67
0.64
0.64
0.55
Ireland (€ cents)
0.79
0.55
0.43
0.43
Portugal (€ cents)
0.39
0.39
0.36
0.36
Romania (€ cents)
0.96
0.76
0.76
0.55
Greece (€ cents)
0.946
0.622
0.622
0.55
Czech Republic (CZK)
0.248
0.248
0.248
0.141
Hungary (HUF)
1.71
1.71
1.71
1.675
Albania (ALL)
2
1.22
1.11
1.11
1.11
Africa, Middle East and Asia Pacific
Vodacom: South Africa (ZAR)
0.12
0.10
0.09
0.09
Vodacom: Democratic Republic of the Congo (USD)
2.00
2.00
2.00
2.00
Lesotho (LSL/ZAR)
0.15
0.12
0.09
0.09
Mozambique (meticash) (Dollar cents)
3
0.39
0.37
0.31
0.25
Tanzania (Tanzanian shillings)
10.40
5.20
2.60
2.00
Turkey (lira)
0.03
0.03
0.03
0.03
Egypt (PTS/Piastres)
11.00
11.00
11.00
11.00
Ghana (peswas)
4
4.00
2.80
2.80
2.45
Notes:
1.
All MTRs are based on end of financial year values.
2.
ALBANIA – There is no official decision so far regarding the reduction of the national MTRs below 1.11 ALL/min. In May 2021 the NRA approved the draft “Results of the cost model of wholesale
mobile
{
network services” based on a study by an external consultant. A glidepath was proposed aiming at a maximum MTR of 1.02 ALL/min in 2022 but the NRA never issued a decision imposing
the
{
mentioned reduction.
3.
MOZAMBIQUE – New cost model completed and glidepath introduced from January 2021.
4.
GHANA – The Ghanian Regulator has, since the declaration of MTN as Significant Market Power (‘SMP’), introduced asymmetrical MTRs. Vodafone Ghana pays 2.8 GHp (70% of 4 GHp) and receives 4 GHp
from MTN. This 30% discount to operators not declared as having SMP may change subject to a period of 2 years when a new Market Review is to be conducted.
Regulation (continued)
Strategic report
Governance
Financials
Other information
249
Vodafone Group Plc
Annual Report 2022
Form 20-F cross reference guide
The information in this document that is referenced in the following table will be included in our Annual Report on Form 20-F f
or 2022 filed with
the
{
SEC
{
(the ‘2022 Form 20-F’). The information in this document will be updated and supplemented at the time of filing with the SEC or later
amended
{
if
{
necessary. No other information in this document is included in the 2022 Form 20-F or incorporated by reference into any filing
s by us under
the Securities Act. Please see ‘Documents on display’ on page 237 for information on how to access the 2022 Form 20-F as filed with the SEC. The 2022
Form 20-F has not been approved or disapproved by the SEC nor has the SEC passed judgement upon the adequacy or accuracy of the 2022 Form 20-F.
Item
Form 20-F caption
Location in this document
Page
1
Identity of Directors, senior management
and
{
advisers
Not applicable
–
2
Offer statistics and expected timetable
Not applicable
–
3
Key information
3B Capitalisation and indebtedness
Not applicable
–
3C Reasons for the offer and use of proceeds
Not applicable
–
3D Risk factors
Principal risk factors and uncertainties
59 to 64
4
Information on the Company
4A History and development of the Company
History and development
240
Contact details
Back cover
Shareholder information: Contact details for Equiniti and EQ Shareholder Services
234
Shareholder information: Articles of Association and applicable English law
235 to 236
Strategic review
16 to 20
Note 1 ‘Basis of preparation’
133 to 138
Note 2 ‘Revenue disaggregation and segmental analysis’
139 to 144
Note 7 ‘Discontinued operations and assets held for sale’
159
Note 11 ‘Property, plant and equipment’
163 to 164
Note 27 ‘Acquisitions and disposals’
199 to 200
Note 28 ‘Commitments’
200
Documents on display
237
4B Business overview
Our strategic framework
1
About Vodafone
2 to 3
Financial and non-financial performance
4 to 5
Chairman’s message
6
Chief Executive’s statement
7
Market and strategy
8 to 9
Mega trends
12 to 13
Strategic review
16 to 20
Our financial performance
24 to 33
Purpose, sustainability and responsible business
34 to 58
Note 2 ‘Revenue disaggregation and segmental analysis’
139 to 144
Regulation
240 to 248
4C Organisation structure
Note 31 ‘Related undertakings’
205 to 213
Note 12 ‘Investments in associates and joint arrangements’
165 to 170
Note 13 ‘Other investments’
171
4D Property, plant and equipment
Strategic review
16 to 20
Note 11 ‘Property, plant and equipment’
163 to 164
4A
Unresolved staff comments
None
–
5
Operating and financial review and prospects
5A Operating results
Our financial performance
24 to 33
Cyber security
49 to 51
Note 21 ‘Borrowings’
180 to 181
Regulation
240 to 248
5B Liquidity and capital resources
Our financial performance: Cash flow, capital allocation and funding
31 to 33
Long-term viability statement
65
Directors’ statement of responsibility: Going concern
118
Note 19 ‘Cash and cash equivalents’
176
Note 21 ‘Borrowings’
180 to 181
Note 22 ‘Capital and financial risk management’
182 to 191
Note 28 ‘Commitments’
200
5C Research and development,
patents and licences etc.
Strategic review
16 to 20
Note 10 ‘Intangible assets’
161 to 162
Regulation: Overview of spectrum licences
247
5D Trend information
Financial and non-financial performance
4 to 5
Mega trends
12 to 13
Long-term viability statement
65
5E Critical accounting estimates
Note 1 ‘Basis of preparation’
133 to 138
Strategic report
Governance
Financials
Other information
250
Vodafone Group Plc
Annual Report 2022
Item
Form 20-F caption
Location in this document
Page
6
Directors, senior management and employees
6A Directors and senior management
Our Board
73 to 74
Our governance structure
75
Division of responsibilities
76
6B Compensation
Annual Report on Remuneration: 2022 Remuneration
99 to 109
Remuneration Policy
93 to 98
Note 23 ‘Directors and key management compensation’
191 to 192
6C Board practices
Shareholder information: Articles of Association and applicable English law
235 to 236
Remuneration Policy
93 to 98
Our Board
73 to 74
Nominations and Governance Committee
80 to 82
Audit and Risk Committee
83 to 88
ESG Committee
89 to 90
Remuneration Committee
91 to 92
Our governance structure
75
Division of responsibilities
76
6D Employees
Our people strategy
21 to 23
Note 24 ‘Employees’
192
6E Share ownership
Annual Report on Remuneration: 2022 Remuneration
99 to 109
Remuneration Policy
93 to 98
All-employee share plans
103
Note 26 ‘Share-based payments’
197 to 198
7
Major shareholders and related party transactions
7A Major shareholders
Shareholder information: Major shareholders
235
7B Related party transactions
Annual Report on Remuneration: 2022 Remuneration
99 to 109
Note 13 ‘Other investments’
171
Note 23 ‘Directors and key management compensation’
191 to 192
Note 29 ‘Contingent liabilities and legal proceedings’
200 to 203
Note 30 ‘Related party transactions’
204
7C Interests of experts and counsel
Not applicable
–
8
Financial information
8A Consolidated statements and other
financial information
Consolidated financial statements
129 to 214
Report of independent registered public accounting firm
–
Note 29 ‘Contingent liabilities and legal proceedings’
200 to 203
Dividend rights
236
8B Significant changes
Not applicable
–
9
The offer and listing
9A Offer and listing details
Shareholder information
234 to 239
9B Plan of distribution
Not applicable
–
9C Markets
Shareholder information: Rights attaching to the Company’s shares
236
9D Selling shareholders
Not applicable
–
9E Dilution
Not applicable
–
9F Expenses of the issue
Not applicable
–
10 Additional
information
10A Share capital
Note 17 ‘Called up share capital’
175
10B Memorandum and Articles of Association
Shareholder information
234 to 239
Description of securities registered
–
10C Material contracts
Shareholder information: Material contracts
237
10D Exchange controls
Shareholder information: Exchange controls
237
10E Taxation
Shareholder information: Taxation
238 to 239
10F Dividends and paying agents
Note 9 ‘Equity dividends’
160
Shareholder information
234 to 239
10G Statements by experts
Not applicable
–
10H Documents on display
Shareholder information: Documents on display
237
10I Subsidiary information
Note 31 ’Related undertakings’
205 to 213
Form 20-F cross reference guide (continued)
Strategic report
Governance
Financials
Other information
251
Vodafone Group Plc
Annual Report 2022
Item
Form 20-F caption
Location in this document
Page
11
Quantitative and qualitative disclosures about
market risk
Note 22 ‘Capital and financial risk management’
182 to 191
12
Description of securities other than equity securities
12A Debt securities
Not applicable
–
12B Warrants and rights
Not applicable
–
12C Other securities
Not applicable
–
12D American depositary shares
Fees payable by ADR holders
–
13
Defaults, dividend arrearages and delinquencies
Not applicable
–
14
Material modifications to the rights of security holders
and use of proceeds
Not applicable
–
15
Controls and procedures
Governance
68 to 115
Directors’ statement of responsibility: Management’s report on internal control
over financial reporting
118
Report of independent registered public accounting firm
–
16
Reserved
16A Audit Committee financial expert
Board Committees
80 to 92
16B Code of ethics
Our US listing requirements
113
16C Principal accountant fees and services
Note 3 ‘Operating profit’
145
Board Committees: Audit and Risk Committee – External audit
87
16D Exemptions from the listing standards
for audit committees
Not applicable
–
16E Purchase of equity securities by the issuer
and affiliated purchasers
Share buybacks
33
16F Change in registrant’s certifying accountant
Not applicable
–
16G Corporate governance
Our US listing requirements
113
16H Mine safety disclosure
Not applicable
–
17
Financial statements
Consolidated financial statements
129 to 214
18
Financial statements
Consolidated financial statements
129 to 214
Report of independent registered public accounting firm
–
19
Exhibits
Index to Exhibits
–
Strategic report
Governance
Financials
Other information
252
Vodafone Group Plc
Annual Report 2022
This document contains ‘forward-looking statements’ within the meaning
of the US Private Securities Litigation Reform Act of 1995 with
{
respect to
the Group’s financial condition, results of operations and
{
businesses, and
certain of the Group’s plans and objectives. In particular, such forward-
looking statements include statements with
{
respect to:
–
the Group’s expectations and guidance regarding its financial and
operating performance, the performance of associates and joint
ventures, other investments and newly acquired businesses,
preparation for 5G and expectations regarding customers;
–
intentions and expectations regarding the development of products,
services and initiatives introduced by, or together with, Vodafone or by
third parties;
–
expectations regarding the global economy and the Group’s operating
environment and market position, including future market
{
conditions,
growth in the number of worldwide mobile phone
{
users and
other
{
trends;
–
revenue and growth expected from Vodafone Business’ and total
communications strategy;
–
mobile penetration and coverage rates, MTR cuts, the Group’s ability to
acquire spectrum and licences, including 5G licences, expected growth
prospects in the Europe and Rest of the World regions and growth in
customers and usage generally;
–
anticipated benefits to the Group from cost-efficiency programmes,
including their impact on the absolute indirect cost base;
–
possible future acquisitions, including increases in ownership in existing
investments, the timely completion of pending acquisition transactions
and pending offers for investments;
–
expectations and assumptions regarding the Group’s future revenue,
operating profit, Adjusted EBITDAaL, Adjusted EBITDAaL margin, free
cash flow, depreciation and amortisation charges, foreign exchange
rates, tax
{
rates and capital expenditure;
–
expectations regarding the Group’s access to adequate funding for its
working capital requirements and share buyback programmes, and
the
{
Group’s future dividends or its existing investments; and
–
the impact of regulatory and legal proceedings involving the Group
and
{
of scheduled or potential regulatory changes.
Forward-looking statements are sometimes, but not always, identified
by
{
their use of a date in the future or such words as ‘will’, ‘anticipates’,
‘aims’, ‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’
or
{
’targets’. By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by
these forward-looking statements. These factors include, but are not
limited to, the following:
–
general economic and political conditions in the jurisdictions in which
the Group operates and changes to the associated legal, regulatory
and tax environments;
–
increased competition;
–
levels of investment in network capacity and the Group’s ability to
deploy new technologies, products and services;
–
evolving cyber threats to the Group’s services and confidential data;
–
the Group’s ability to embed responses to climate-related risks into
business strategy and operations.
–
rapid changes to existing products and services and the inability of
new
{
products and services to perform in accordance with expectations;
–
the ability of the Group to integrate new technologies, products and
services with existing networks, technologies, products and services;
–
the Group’s ability to generate and grow revenue;
–
a lower than expected impact of new or existing products, services
or
{
technologies on the Group’s future revenue, cost structure and
capital expenditure outlays;
–
slower than expected customer growth, reduced customer
retention,
{
reductions or changes in customer spending and
increased
{
pricing pressure;
–
the Group’s ability to extend and expand its spectrum resources, to
support ongoing growth in customer demand for mobile data services;
–
the Group’s ability to secure the timely delivery of high-quality
products from
{
suppliers;
–
loss of suppliers, disruption of supply chains and greater than
anticipated prices of new mobile handsets;
–
changes in the costs to the Group of, or the rates the Group may
charge for, terminations and roaming minutes;
–
the impact of a failure or significant interruption to the Group’s
telecommunications, networks, IT systems or data protection systems;
–
the Group’s ability to realise expected benefits from acquisitions,
partnerships, joint ventures, franchises, brand licences, platform sharing
or other arrangements with third parties;
–
acquisitions and divestments of Group businesses and assets and
the
{
pursuit of new, unexpected strategic opportunities;
–
the Group’s ability to integrate acquired business or assets;
–
the extent of any future write-downs or impairment charges on the
Group’s assets, or restructuring charges incurred as a result of an
acquisition or disposition;
–
developments in the Group’s financial condition, earnings and
distributable funds and other factors that the Board takes into
account
{
in determining the level of dividends;
–
the Group’s ability to satisfy working capital requirements;
–
changes in foreign exchange rates;
–
changes in the regulatory framework in which the Group operates;
–
the impact of legal or other proceedings against the Group or other
companies in the communications industry; and
–
changes in statutory tax rates and profit mix.
A review of the reasons why actual results and developments may
differ
{
materially from the expectations disclosed or
{
implied within
forward-looking statements can be found under ‘Risk management’
on
{
pages
{
59 to 65 of this document. All subsequent written or oral
forward-looking statements attributable to the Company or any member
of the Group or any persons acting on their behalf are expressly qualified
in their entirety by
{
the factors referred to above. No assurances can
be
{
given that the forward-looking statements in this document will
be
{
realised. Subject to
{
compliance with applicable law and regulations,
Vodafone does not
{
intend to update these forward-looking statements
and does not undertake any obligation to do so.
References in this document to information on websites, including
other
{
supporting disclosures located thereon such as videos, our ESG
Addendum and our TCFD report, and/or social media sites are included
as
{
an aid to their location and such information is not incorporated in,
and
{
does not form part of, the 2022 Annual Report on Form 20-F.
Forward-looking statements
unaudited information
Strategic report
Governance
Financials
Other information
253
Vodafone Group Plc
Annual Report 2022
The definitions of non-GAAP measures are included in the ‘Non-GAAP measures’ section on pages 223 to 233.
3G
A cellular technology based on wide band code division multiple access delivering voice and faster data services.
4G
4G or long-term evolution (‘LTE’) technology offers even faster data transfer speeds than 3G/HSPA.
5G
5G is the fifth-generation wireless broadband technology which provides better speeds and coverage than the current 4G.
ADR
American depositary receipts is a mechanism designed to facilitate trading in shares of non-US companies in
{
the US stock
markets. The main purpose is to create an instrument which can easily be settled through US
{
stock market clearing systems.
ADS
American depositary shares are shares evidenced by American depositary receipts. ADSs are issued by a depositary bank and
represent one or more shares of a non-US issuer held by the depositary bank. The main purpose of ADSs is to facilitate trading
in shares of non-US companies in the US markets and, accordingly, ADRs which evidence ADSs are in a form suitable for
holding in US clearing systems.
Africa
Comprises the Vodacom Group and businesses in Egypt and Ghana.
AGM
Annual General Meeting.
Applications (‘apps’)
Apps are software applications usually designed to run on a smartphone or tablet device and provide a convenient
means
{
for
{
the user to perform certain tasks. They cover a wide range of activities including banking, ticket purchasing, travel
arrangements, social networking and games. For example, the MyVodafone
{
app lets customers check their bill totals on their
smartphone and see the minutes, texts and data allowance remaining.
ARPU
Average revenue per user, defined as customer revenue and incoming revenue divided by average customers.
B2C
Business-to-Consumer refers to the process of selling products and services directly between a business and consumers who
are the end-users.
Capital additions
Comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments
and integration capital expenditure.
Churn
Total gross customer disconnections in the period divided by the average total customers in the period.
Cloud services
This means the customer has little or no equipment, data and software at their premises. The capability associated with the
service is run from the Vodafone network and data centres instead. This removes the need for customers to make capital
investments and instead they have an operating cost model with a recurring monthly fee.
Common Functions
Comprises central teams and business functions.
Converged customer
A customer who receives fixed and mobile services (also known as unified communications) on a single bill or who receives a
discount across both bills.
Depreciation and amortisation
The accounting charge that allocates the cost of tangible or intangible assets, whether owned or leased, to the income
statement over its useful life. The measure includes the profit or loss on disposal of property, plant and equipment, software
and right-of-use assets.
Eliminations
Refers to the removal of intercompany transactions to derive the consolidated financial statements.
Europe
Comprises the Group’s European businesses and the UK.
FCA
Financial Conduct Authority.
Financial services revenue
Financial services revenue includes fees generated from the provision of advanced airtime, overdraft, financing and
lending
{
facilities, as well as merchant payments and the sale of insurance products (e.g. device insurance, life insurance
and
{
funeral cover).
Fixed service revenue
Service revenue relating to the provision of fixed line and carrier services.
Fibre to the cabinet (‘FTTC’)
Involves running fibre optic cables from the telephone exchange or distribution point to the street cabinets which then
connect to a standard phone line to provide broadband.
Fibre to the home (‘FTTH’)
Provides an end-to-end fibre optic connection the full distance from the exchange to the customer’s premises.
GAAP
Generally Accepted Accounting Principles.
GSMA
Global System for Mobile Communications Association
IAS 17
International Accounting Standard 17 ‘Leases’. The previous lease accounting standard that applied to the Group’s statutory
results for all reporting periods up to and including the quarter ended 31 March 2019.
ICT
Information and communications technology.
IFRS
International Financial Reporting Standards.
IFRS 15
International Financial Reporting Standard 15 ‘Revenue from Contracts with Customers’. The accounting policy adopted by
the Group on 1 April 2018.
IFRS 16
International Financial Reporting Standard 16 ‘Leases’. The accounting policy adopted by the Group on 1 April 2019.
Incoming revenue
Comprises revenue from termination rates for voice and messaging to Vodafone customers.
Integration capital expenditure
Capital expenditure incurred in relation to significant changes in the operating model, such as the integration of recently
acquired
{
subsidiaries.
Internet of Things (‘IoT’)
The network of physical objects embedded with electronics, software, sensors, and network connectivity, including built-in
mobile SIM cards, that enables these objects to collect data and exchange communications with one another or a database.
LTM
Last twelve months
Definition of terms
unaudited information
Strategic report
Governance
Financials
Other information
254
Vodafone Group Plc
Annual Report 2022
Mark-to-market
Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market
price of the asset or liability.
Mbps
Megabits (millions) of bits per second.
Mobile broadband
Mobile broadband allows internet access through a browser or a native application using any portable or mobile device such
as smartphone, tablet or laptop connected to a cellular network.
Mobile service revenue
Service revenue relating to the provision of mobile services.
Mobile termination rate (‘MTR’)
A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or
fixed network operator.
Mobile virtual network operator
(‘MVNO’)
Companies that provide mobile phone services under wholesale contracts with a mobile network operator, but do not have
their own licence or spectrum or the infrastructure required to operate a network.
Next-generation networks (‘NGN’)
Fibre or cable networks typically providing high-speed broadband over 30Mbps.
Net Promoter Score (‘NPS’)
Net Promoter Score is a customer loyalty metric used to monitor customer satisfaction.
Operating expenses (‘Opex’)
Comprise primarily sales and distribution costs, network and IT related expenditure and business support costs.
Other Europe
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic, Hungary and Albania.
Other Markets
Other Markets comprise Turkey, Egypt and Ghana.
Other revenue
Other revenue principally includes equipment revenue, interest income, income from partner market arrangements and lease
revenue, including in respect of the lease out of passive tower infrastructure.
Partner markets
Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafone’s
global products and services to be marketed in that operator’s territory and extending Vodafone’s reach into such markets.
Penetration
Number of SIMs in a country as a percentage of the country’s population. Penetration can be in excess of 100% due to
customers owning more than one SIM.
Petabyte
A petabyte is a measure of data usage. One petabyte is a million gigabytes.
Pps
Percentage points.
RAN
Radio access network is the part of a mobile telecommunications system which provides cellular coverage to mobile
phones
{
via a
{
radio interface, managed by thousands of base stations installed on towers and rooftops across the coverage
area, and linked to the core nodes through a backhaul infrastructure which can be owned, leased or a mix of both.
Reported growth
Reported growth is based on amounts reported in euros and determined under IFRS.
Restructuring costs
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall
{
efficiency.
Retail service revenue
Retail service revenue comprises Service revenue excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual
Network Operator (‘FVNO’) wholesale revenue.
Return on capital employed
(‘ROCE’)
Return on capital employed reflects how efficiently we are generating profit with the capital we deploy.
Revenue
The total of Service revenue (defined below) and Other revenue (defined above).
Roaming and Visitor
Roaming: allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually
while
{
travelling abroad. Visitor: revenue received from other operators or markets when their customers roam on one of
our
{
markets’ networks.
Smartphone penetration
The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and
telemetric
{
applications.
Service revenue
Service revenue is all revenue related to the provision of ongoing services to the Group’s consumer and enterprise customers,
together with roaming revenue, revenue from incoming and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
SME
Small and medium-sized enterprises.
SOHO
Small-Office-Home-Office customers.
Spectrum
The radio frequency bands and channels assigned for telecommunication services.
Task Force on Climate-related
Financial Disclosures (‘TCFD’)
The TCFD has released recommendations which provide a global framework for companies and other organisations
to
{
develop more effective climate-related financial disclosures through their existing reporting processes.
Vodafone Business
Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-
related
{
services.
Vodafone Procurement Company
(‘VPC’)
VPC is Vodafone’s procurement company, leading purchasing and supplier management for Vodafone as a whole. Based in
Luxembourg, VPC was founded in 2008 and manages most of Vodafone’s spending with suppliers worldwide. VPC supports
the needs of Vodafone’s operating companies and group functions, and sells procurement services to third parties.
_VOIS
Established in 2006, _VOIS (Vodafone Intelligent Solutions) has grown from a single entity service provider to a global
purpose-driven company that provides a comprehensive portfolio of services to Vodafone and other telecommunications
operators throughout the world.
Definition of terms (continued)
unaudited information
Strategic report
Governance
Financials
Other information
255
Vodafone Group Plc
Annual Report 2022
Notes
Strategic report
Governance
Financials
Other information
256
Vodafone Group Plc
Annual Report 2022
Notes (continued)
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless
otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and The future is exciting. Ready? are trade marks owned by
Vodafone. Other product and company names
{
mentioned herein may be the trade marks of their respective owners.
The content of our website (vodafone.com) should not be considered to form part of this Annual Report or our Annual Report on Form 20-F.
© Vodafone Group 2022
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